Answer:
$46300
Explanation:
interest that earned will be $50,000×10%=$5000
Since payments are made semi-annually, a payment of $2,500 is made every six months
market rate for the bond is 12%, which implies 6% for every 6 months since the payment is semi-annually.
using the Present Value Factor Table, find out the Present Value Factor of the bond.
using 6% interest for 10 terms of six month each, the Present Value Factor is 0.558.
using the Present Value of an Annuity Factor Table, the Present Value of an Annuity Factor is 7.36.
current value of interest payments = 7.36 * $2,500 = $18400
current face value of bond= 0.558 * $50,000 = $27900
current price of bond = $27900 + $18400 = $46300