You are half right. You do take the PV of the 100,000 at 9% for five periods giving you the multiplier of .64993 and take that times 100,000 and it gives you the present value of the principal payment when the obligation becomes due in five years 100,000 in five years is worth $64993 if the market rate is 9%. Where you went wrong was using the market rate to figure out the present value of the interest payments. The coupon rate is what you will be paid as per the bonds, so use 7% and since you are being paid every year, it is an ordianry annuity. 5 years at 7% under the present value of an ordianry annuity gives the multiplier 4.1002. You multiply that by the amount of the annual interest payment. In this case it is easy to figure out since it is based upon 100,000 at 7%= 7,000 and take that times 4.1002 and you get $28,701.40 You add the two PV numbers together: $64993
+$28701.40
$93694.40
$93,694.40 is the answer
