Time value of money

Maths & Stats

Find issue price of 11% bond of Rs.1200/- redeemable after 7 years at 10% premium if opportunity cost is 13% p.a. (a) 1145 (b) 1195 (c) 1205 (d) None of these

Amriya Abdulsalam

CA Foundation

★ 0

01-Dec-22 15:50

495

Answers (6)

Calculate present value of interest and redemption amount - Rs. 1320 by discounting these at 13%

CA Suraj Lakhotia

Admin

05-Dec-22 17:14

Can you pls write the steps and send me the photo

Thread Starter

Amriya Abdulsalam

CA Foundation

★ 0

07-Dec-22 19:15

Interest each year is 132 - This is annuity for 7 years. Calculate PV using annuity formula. Redemption amount is 1320 - This is sinlgle payment made after 7 years. Calculate PV of this using the compound interest formula.

CA Suraj Lakhotia

Admin

07-Dec-22 19:18

You have similar problems in study material- Just that instead of redemption at 1200, it is at 1320

CA Suraj Lakhotia

Admin

07-Dec-22 19:24

Add both the values and you get Option 1

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Pavan Kumar

Faculty

08-Dec-22 18:13

Pavan Kumar Faculty

Add both the values and you get Option 1

Thread Starter

Amriya Abdulsalam

CA Foundation

★ 0

08-Dec-22 18:17