3.18. Equation (3.8) relates the value of a bond P, to the bond interest and current rate of interest by reflecting all values to a future worth. Develop an equation that reflects all values to a uniform semiannual worth and solve Example 3.9 with this equation Example 3.9. A $1000 bond that has 10 years to maturity pays interest semiannually at a nominal annual rate of 8 percent. An investor wishes to earn 9 percent on her investment. What price could she pay for the bond in order to achieve this 9 percent interest rate? Solution. Application of Eq. (3.8) gives P (f/p, 0.045, 20) = (f/a, 0.045, 20) (0.04)(1000) + 1000 P(2.4117) = (31.371)(0.04)(1000) + 1000 P =$934.96 3.18. Equation (3.8) relates the value of a bond P, to the bond interest and current rate of interest by reflecting all values to a future worth. Develop an equation that reflects all values to a uniform semiannual worth and solve Example 3.9 with this equation Example 3.9. A $1000 bond that has 10 years to maturity pays interest semiannually at a nominal annual rate of 8 percent. An investor wishes to earn 9 percent on her investment. What price could she pay for the bond in order to achieve this 9 percent interest rate? Solution. Application of Eq. (3.8) gives P (f/p, 0.045, 20) = (f/a, 0.045, 20) (0.04)(1000) + 1000 P(2.4117) = (31.371)(0.04)(1000) + 1000 P =$934.96