sagnik2422
Feb 12, 2014, 12:13 PM
Hi, I am stuck on this and need some help with steps :
When Patey Pontoons issued 6.50% bonds on January 1, 2011, with a face amount of $560,000, the market yield for bonds of similar risk and maturity was 7.50%. The bonds mature December 31, 2014 (4 years). Interest is paid semiannually on June 30 and December 31.
Question : 1.Determine the price of the bonds at January 1, 2011
My work : I did Interest : 18,200 x 6.87396
Principal : 560,000 x 0.75491
and got 550,376. This was wrong, I am confused on how to solve this since 7.5 / 2 = 3.75 is not found in the present value tables
When Patey Pontoons issued 6.50% bonds on January 1, 2011, with a face amount of $560,000, the market yield for bonds of similar risk and maturity was 7.50%. The bonds mature December 31, 2014 (4 years). Interest is paid semiannually on June 30 and December 31.
Question : 1.Determine the price of the bonds at January 1, 2011
My work : I did Interest : 18,200 x 6.87396
Principal : 560,000 x 0.75491
and got 550,376. This was wrong, I am confused on how to solve this since 7.5 / 2 = 3.75 is not found in the present value tables