Answer:
The issue price of the bond is $46,320
Explanation:
Given;
Face value = $50,000
stated interest rate = 10%
period of duration = 5 years
market rate = 12%
Interest payments are made semi-annually
Price of Bond = (Present value of face) + (Present value of coupons)
Coupon payments is given as
annual payment = 10% of 50,000 = $5,000
semi - annual payment = ¹/₂ × $5,000 = $2,500
Price of Bond = $27,919.7 + $18,400.2
= $46,320
Therefore, the issue price of the bond is $46,320