Question

If Pantheon Capital S.A. is raising funds via a euro medium term note with the following characteristics
Coupon rate: 8.00% payable semi-annually on June 30 and Dec 31
Date Of issuance: Feb 28, 2011
Maturity: August 31, 2011
How much in dollars will Pantheon receive for each $1,000 note sold

Answer 1

In the given case the entity is raising funds through medium term loan issue which has a coupon rate of 8% which pays semiannual interest on June 30 and December 31,

Here the date of issue of note is Feb 28, 2011 and the maturity is on August 31 2011, thus the period of note outstanding is 6 months i.e from Feb end to August end.

Maturity amount ={ principal amount +( Principal× Rate × 6 /12)} -- ( as the period is only 6 months ).

Maturity amount = { $ 1,000 + ($ 1,000 × 8% × 6/12 )}

Maturity amount = $1,000 + $40

Maturity amount = $ 1,040.

Thus Pantheon will receive for each $1,000 note sold = $ 1,040.