Respuesta :
Answer:
The issue price of the bond is $44,330,000
Explanation:
The issue price of the bond can be computed using the pv formula in excel,which is given as =-pv(rate,nper,pmt,fv)
rate is the semi-annual yield to maturity on the bond which is 7%/2=3.5%
nper is the number of coupon payments the bond would make before maturity,which 15 years multiplied by 2=30
pmt is the semi-annual interest payment of the bond i.e 8%/2*$40.6 million=$1.624 million
The fv is the face value of the bond repayable at maturity which is $40.6 million
=-pv(3.5%,30,1.624,40.6)
pv=$44.33 million
The issue price is the price that prevails in the shares of the firm when they are made available to the general public in order to purchase and make the investment to it. The earning that the investors make is the difference between the discount issue price and full face value paid at maturity.
The issue price of the bond can be computed using the PV formula in excel, which is given as =-PV(rate, no. of periods, installment amount, future value)
Rate is the semi-annual yield to maturity on the bond=[tex]\begin{aligned} \frac{7\%}{2}=3.5\%\end{aligned}[/tex]
No. of periods is the number of coupon payments the bond would make before maturity=[tex]15\: years \times 2=30[/tex]
Installment amount is the semi-annual interest payment of the bond= [tex]\begin{aligned}\frac{8\%}{2} \times$40.6 million=\$1.624 million\end{aligned}[/tex]
The FV is the face value of the bond repayable at maturity which is $40.6 million =[tex]-PV(3.5\%,30,1.624,40.6)[/tex]
[tex]PV=\$44.33\: million[/tex]
The issue price of the bond is $44,330,000
To know more about the present and the future value, refer to the link below:
https://brainly.com/question/17164990
