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A government issues $6000000 of serial bonds paying interest at j12 = 9%, of which $1000000...

A government issues $6000000 of serial bonds paying interest at j12 = 9%, of which $1000000 is redeemed in 15 years, $1500000 is redeemed in 20 years and $3500000 is redeemed in 30 years. Determine the purchase price on the day that the bonds were issued, in order for investors to receive a yield of j12 = 7%.

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Computation of Issue price Semi- Date Annuals 1-15 Interest Cash flow PV factor at 7% Disc. cash flow $ $ 4,918,271 $ 15th 16

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