Question: Problem 7-7 TIPS Interest and Par Value (LG7-2) A 3.000 percent TIPS has an original reference CPI of 185.6. If the current CPI is 210.9,

Problem 7-7 TIPS Interest and Par Value (LG7-2)

A 3.000 percent TIPS has an original reference CPI of 185.6. If the current CPI is 210.9, what is the par value and current interest payment of the TIPS? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Problem 7-7 TIPS Interest and Par Value (LG7-2)

Par value	$1,136.31
Interest Payment	$17.04

Par value of TIPS= (current cpi\previous cpi)x1000

(210.9/185.6)*1000=1136.31

Interest on TIPS=current value*interest rate

1/2*3.000%*1136.31=17.04

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