Answer:
<em>$10095.24</em>
Explanation:
<em>Let recall that,</em>
<em>The government bond with a principal amount = $10000</em>
<em>coupon rate of 6% annually</em>
<em>The interest rate given is = 5%</em>
<em>PV (Price value) = total [Ct/ (1+r)^t] + principal/(1+r)^t
</em>
<em>
Then
</em>
<em>Price value = 600/(1+0.05) + 600/(1+0.05)^2 + 10000/(1+0.05)^2
</em>
<em>
600/1.05 + 600/1.1025 + 10000/1.1025
</em>
<em>
571.429 + 544.2177 + 9070.295
</em>
<em>
It gives= 10185.94
</em>
<em>
Once the first coupon is deducted (-571.429), the present value of today is 9614.512</em>
<em>
Therefore,</em>
<em>in one year's time ,it will be, 9614.512 x 1.05 = 10095.24</em>