All the current answers are wrong Compute the issue price of

All the current \"answers\" are wrong.

Compute the issue price of each of the following bonds. Round your answers to the nearest dollar.

b. $10,000,000 face value, serial bonds repayable in 40 equal semiannual installments of $500,000, which includes coupon payments and repayment of principal, for 20 years, priced on the market to yield 6% compounded annually.

Solution

You can calculate issue price using PV function of Excel. Its parameters are as follows :

Nper = 40

Pmt = 500000

Rate = 6%/2 =3%

Fv = 10000000

Now apply formula

=-PV(3%,40,500000,10000000)

Now press enter you will get answer as 14622954.39 = 14622954