A B D E F G H J KL M 1 PREMIUM Bond 1 DISCOUNT Bond 2 Bond 1 $ $ $ 500,000 2041 2017 24 1 500,000 2041 2017 24 500,000 2041 2017 24 1 Yield 2.00% Yield 3.00% $ 2.50% 500,000 0.553 276,400 $ $ $ 1 2 3 4 Bond information 5 Face value of bond 6 Maturity Date (assume Dec 31) 7 Purchase Date (assume Jan 1) 8 No. of years until retirement 9 10 Calculate present value of bond principle 11 Stated interest rate on bond 12 Face value payable upon maturity 13 PF factor 14 PV of bond face value 15 16 Calculate annual bond interest 17 Face value payable upon maturity 18 Annual interest rate on bond 19 Annual interest earned on bond 20 21 Calculate present value of bond interest 22 Annual interest 23 PF factor 24 PV of annual interest earned on bond 25 26 Calculate the purchase price of the bond 27 PV of bond principle 28 PV of bond interest 29 Purchase price of bond 30 31 32 $ 500,000 2.50% 12,500 2.00% 3.00% 1 1 1 $ $ $ $ $ $ 1 1 12,500 17.899 223,738 $ $ $ $ $ $ 276,400 223,738 500,138 23