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If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be
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If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be

User Spinlock
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1 Answer

16 votes
16 votes

Answer:

the present value is $495,250.76

Step-by-step explanation:

The computation of the present value is shown below;

Given that

RATE is 7% ÷ 2 = 3.5%

Future value be $500,000

NPER is 2

PMT = $500,000 × 6% ÷ 2 = $15,000

The formula is shown below:

=-PV(RATE,NPER,PMT,FV,TYPE)

After applying the above formula, the present value is $495,250.76

User Plutownium
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