**No Excel, Show all work. BA 2 Plus Financial Calculator allowed.

John buys a 10 year 1000 par value bond with semiannual coupons paid at an annual rate of 5%. The price of the bond assumes an annual nominal yield of 5% compounded semiannually. As John receives each coupon, he deposits the money in an account earning interest at an annual effective rate of i. At the end of 10 years he receives the final coupon payment and the redemption value of the bond (assumed to be the face value). He finds that he has earned an effective annual yield of 6% on your investment. Find i.