Determine the amount purchaser has to pay for the bond

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Reference no: EM131968100

1. What is the present value of the following cash flows (received at the End of the appropriate period): Year 1: 2,000 Year 2: 2,500 Year 3: 3,500 Year 4: 5,500 Year 5: 6,000 Discount rate = 2.5%

2. A company has issued a $20,000, 10 year bond. Each bond pays interest quarterly of 4%. Determine the amount a purchaser has to pay for the bond, if it yield a 12% compounded semiannually.

These are the options

a. PW = $ 31902

b. PW = $ 11902

c. PW = $ 28000

d. PW = $ 32000

Reference no: EM131968100

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