PREMIUM Bond 1 DISCOUNT Bond 1 Bond 1 $ $ $ Bond information Face value of bond Maturity Date (assume Dec 31) Purchase Date (assume Jan 1) No. of years until retirement 500,000 2041 2017 24 500,000 2041 2017 24 500,000 2041 2017 24 Yield Yield 3.00% Calculate present value of bond principle Stated interest rate on bond Face value payable upon maturity PF factor PV of bond face value $ $ 2.50% 500,000 0.553 276,400 2.00% 500,000 0.622 310,860 $ $ $ $ Calculate annual bond interest Face value payable upon maturity Annual interest rate on bond Annual interest earned on bond 500,000 2.50% 12,500 500,000 2.50% 12,500 $ $ $ $ UP $ Calculate present value of bond interest Annual interest PF factor PV of annual interest earned on bond 12,500 17.899 223,738 12,500 18.9139 236,424 $ $ $ $ $ $ $ Calculate the purchase price of the bond PV of bond principle PV of bond interest Purchase price of bond 276,400 223,738 500,138 310,860 236,424 547,284 Bond Number Years until maturity Yield Bond 1 24 2.00% Bond 1 24 Bond 1 24 2.00% 3.00% Beginning Carrying Value of Bond Interest Earned Interest Earned Ending Carrying Value of Bond Beginning Carrying Value of Bond Interest Earned Ending Carrying Value of Bond Beginning Carrying Value of Bond Interest Earned Ending Carrying Value of Bond 1 2 3 4 $ $ $ $ $ $ $ 5 6 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 S 2 $ 3 $ 4 $ 5 $ 6 $ 7 $ 8 $ 9 $ 9 10 $ 11 $ 12 $ 13 $ 14 $ 15 $ 16 $ 17 $ 18 $ 19 $ 20 $ 21 $ 22 $ 23 $ 24 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ PREMIUM Bond 1 DISCOUNT Bond 1 Bond 1 $ $ $ Bond information Face value of bond Maturity Date (assume Dec 31) Purchase Date (assume Jan 1) No. of years until retirement 500,000 2041 2017 24 500,000 2041 2017 24 500,000 2041 2017 24 Yield Yield 3.00% Calculate present value of bond principle Stated interest rate on bond Face value payable upon maturity PF factor PV of bond face value $ $ 2.50% 500,000 0.553 276,400 2.00% 500,000 0.622 310,860 $ $ $ $ Calculate annual bond interest Face value payable upon maturity Annual interest rate on bond Annual interest earned on bond 500,000 2.50% 12,500 500,000 2.50% 12,500 $ $ $ $ UP $ Calculate present value of bond interest Annual interest PF factor PV of annual interest earned on bond 12,500 17.899 223,738 12,500 18.9139 236,424 $ $ $ $ $ $ $ Calculate the purchase price of the bond PV of bond principle PV of bond interest Purchase price of bond 276,400 223,738 500,138 310,860 236,424 547,284 Bond Number Years until maturity Yield Bond 1 24 2.00% Bond 1 24 Bond 1 24 2.00% 3.00% Beginning Carrying Value of Bond Interest Earned Interest Earned Ending Carrying Value of Bond Beginning Carrying Value of Bond Interest Earned Ending Carrying Value of Bond Beginning Carrying Value of Bond Interest Earned Ending Carrying Value of Bond 1 2 3 4 $ $ $ $ $ $ $ 5 6 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 S 2 $ 3 $ 4 $ 5 $ 6 $ 7 $ 8 $ 9 $ 9 10 $ 11 $ 12 $ 13 $ 14 $ 15 $ 16 $ 17 $ 18 $ 19 $ 20 $ 21 $ 22 $ 23 $ 24 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
