okay this bond is old at a premium since the market interest rate is lower than the coupon interest rate and therefore we need to discount all the cash flows proceed from the bond to lower rate.
1- face value is 800,000 will be multiplied by 0,67556 factor. = 540448
2- interest rate actually paid equal to 80000 divided by two since its paid semi-annually so 40000 * 1-(1/(1+.04 power 10) all divided .04 or by multiply it by 8.11090 factor will result in 324436 - thus, the amount porceed equal to 540448+324436 = 864884 which is answer C
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Mohamed Shamsaldin
Accountant
Dammam
Saudi Arabia
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Original Message:
Sent: 02-12-2020 11:32 AM
From: Syed Yousuf Jamal
Subject: bond
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Syed Yousuf Jamal
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