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A $17,000, 8

Finance

A $17,000, 8.4% bond redeemable at par is purchased 7.5 years before maturity to yield 9.2% compounded semi-annually. If the bond interest is payable semi-annually, what is the purchase price of the bond? 
The purchase price of the bond is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) 
 

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Computation of Purchase Price of Bond using PV Function in Excel:

=-pv(rate,nper,pmt,fv)

Here,

PV = Purchase Price of Bonds = ?

Rate = 9.2% / 2= 4.6%

Nper = 7.5 years * 2 = 15 periods

PMT = $17,000*8.4%/2 = $714

FV = $17,000

Substituting the values in formula:

=-pv(4.6%,15,714,17000)

PV or Purchase Price of Bonds = $16,274.71