Answer:
$92,278
Explanation:
Annual coupon = $100,000 × 8% = $8,000
Annual coupon discount factor = ((1-(1/(1 + r))^n)/r)
Where;
r = semi-annul interest rate = 10%/2 = 5%, 0.05
n = number of period = 5 × 2 = 10 semi-annuals
Annual coupon discount factor = ((1-(1/(1.05))^10)/0.05) = 7.72173492918482
PV of coupon = $8,000 × 7.72173492918482 × 0.5 = $30,886.94
PV of the face value of the bond = 100,000 ÷ (1 + 0.05)^10 = $61,391.33
Therefore, we have:
Price of bond = $30,886.94 + $61,391.33 = $92,278
