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Title: A $100 000 bond, redeemable at 110 in seven years with 6.75% coupons payable annually, is bought to ... Post by: Lada on Nov 27, 2017 A $100 000 bond, redeemable at 110 in seven years with 6.75% coupons payable annually, is bought to yield 7.25% compounded annually.
(i) Determine the discount and the purchase price. (ii) Construct a schedule of accumulation of discount. Title: Re: A $100 000 bond, redeemable at 110 in seven years with 6.75% coupons payable annually, is bought ... Post by: yacom on Nov 27, 2017 FV = $100 000; P/Y = C/Y = 1; n = 7(1) = 7; b = = 0.0675; i = = 0.0725;
PMT = 100 000(0.0675) = $6 750.00. Since b < i, the bond sells at a discount. (i) Discount = [100000(0.0675) -110000(0.0725)] = -1225(5.342633) = -$6544.73 PP = 110000.00 - 6544.73 = $103 455.27 (ii) |