First we need to arrive at the market values of funds to be raised

Market value of Acquisition Arrangement #1

For which we need to assess the present value of this form of funding, i.e. $ 1000 FV bonds

using the formula,

Market value of bonds= PV of future interest payments + PV of Face value to be received at maturity

PV=(Coupon payment*((1-(1+r)^-n)/r))+(FV/(1+r)^n)

Semi-annual coupon- 1000000*8%/2=

40000