question archive A Php 250,000 bond with a bond rate of 8% annually pays dividend semi-annually and is redeemable at par at the end of 5 years
A Php 250,000 bond with a bond rate of 8% annually pays dividend semi-annually and is redeemable at par at the end of 5 years
Subject:AccountingPrice:2.84 Bought3
A Php 250,000 bond with a bond rate of 8% annually pays dividend semi-annually and is redeemable at par at the end of 5 years. Determine the purchase price to yield a holder, if the bond pays 10% compounded semi- annually.
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Calculate purchase price of bond as shown below:Purchase priceCoupon amount*(1-(1+r^-n)/r) + Par value*(1/(1+r)^n)Purchase price250000*4%*(1-(1.05^-10)/0.05) + 250000*(1/(1.05^10))Purchase price10000*7.7217 + 250000*0.6139Purchase price230695.66Thus, purchase price of bond is 230,695.66
