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Engineering Economy What is the present worth of a $50,000 bond that has an interest of...

Engineering Economy

What is the present worth of a $50,000 bond that has an interest of 20% per year payable quarterly? The bond matures in 5 years. The interest rate in the marketplace is 10% per year, compounded semiannually.

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Answer #1

Here, Coupon Payment Quarterly =

Redemption Amount = $50000

Discount Rate = 10% / year compounded semi-annually

Now,

Now, Present Worth of Bond = PV of Coupon Payment + PV of redemption value

  • Present Worth of Bond = $69781.14
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