Find the PW of a 10-year bond paying 6% per year nominal rate semiannually that is...
Find the PW of a 10-year bond paying 6% per year nominal rate semiannually that is redeemable at face value if bought by a purchaser to yield 10% per year. The face value of the bond is $1,000. Find out the value of the variables listed below.
- N = ?
- r% = ?
- i% = ?
- C = ?
- Z = ?
Homework Answers
N = 10 * 2 = 20 periods
r% = 6% / 2 = 3%
i% = 10% / 2 = 5%
C = 3% * 1000 = 30
Z = 30 * (P/A, 5%,20) + 1000 * (P/F, 5%,20)
= 30 * 12.462210 + 1000 * 0.376889
= 750.76
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