You invest in a 10-year $10,000 bond that pays interest at an annual rate 7% every 6 months for 10 years. The market rate (yield), i.e., what you will earn on the bond is 5%. Thus, you will receive the maturity value of $10,000 at the end of 10 years, and interest payments every 6 months of $350 (10,000 x 7% x 6/12). Requited: Calculate the issue price of the bond - the amount you will invest today to purchase this bond. Cash Flow Maturity Value Interest Payment Issue Price Required: Six Month Period 2 Investment in a Bond Beginning Balance Amount 10,000 350 Prepare an investment schedule for the first two months. Investment Schedule Present Value Factor Appropriate Interest Rate Interest earned Interest Received Present Value Ending balance

You invest in a 10-year $10,000 bond that pays interest at an annual rate 7% every 6 months for 10 years. The market rate (yield), i.e, what you will earn on the bond is 5%. Thus, you will receive the maturity value of $10,000 at the end of 10 years, and interest payments every 6 months of $350(10,0007%6/12). Requited: Calculate the issue price of the bond - the amount you will invest today to purchase this bond. Required: Prepare an investment schedule for the first two months