Homework Answers
Cash interest = 700,000*8% =56,000
N= 20 Years
r= 10%
Bond Price = Present value of interest + Present Value of Par Amount
Bond Price = 56,000*PVA$1 @10% for 20 +700,000* PV $1 at 10% for 20
= 56,000*8.541 +700,000*0.14864 = $ 476,784 +104,048 = $580,832 (Answer)
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