Task: Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (r_d) is 6.20%, based on semiannual compounding. What is the bonds price?

Solution:

Par value = FV $1,000

Coupon rate 7.25%

Periods/year 2

Yrs to maturity 15

Periods = Years 2 = N 30

Going annual rate = YTM = r_d 6.20%

Periodic rate = r_d/2 = I/YR 3.10%

Coupon rate Par/2 = PMT $36.25

PV $1,101.58 Question:

Please, explain in VERY DETAILED way how thw PV was calculated. Provide formula and substitute numbers from the task.