Question: How do they get 40 as payments? C ) 8.0 % Semiannual rate = 7% / 2 = 3.5% Nper = 10 years x 2
How do they get 40 as payments?
C ) 8.0 %
Semiannual rate = 7% / 2 = 3.5%
Nper = 10 years x 2 = 20
FV = $1,000
PV = $1,071.06
PMT =PMT(rate,nper,-pv,fv)
=PMT(3.5%,20,-1071.06,1000)
= $40.
Annual coupon payment = $40 x 2 = $80.
Coupon rate = (Annual coupon payment / Face value) x 100
= ($80 / $1,000) x 100
= 8.0%
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