Answer:
$1,195
Explanation:
Calculation the invoice price of the bond
Using this formula
Invoice price of the bond =Clean price + Accrued interest
First step is to find the clean price using this formula
Clean price=Bond amount par value×Ask price percentage
Let plug in the formula
Clean price =$1,000×117/100
Clean price=$1,170
Second step is to calculate for the accrued interest.
Since Semiannually means 6 month, and we were told that the last interest payment was made a month ago which mean we have 5 months left. Now let find the accrued interest using this formula
Accrued interest = Number of days in month ×(5months/6months)
Let plug in the formula
Accrued interest=30× (5months/6months)
Accrued interest =30×0.83333
Accrued interest =30×0.83333
Accrued interest =$25
The last step is to calculate for invoice price of the bond using this formula
Invoice price of the bond =Clean price + Accrued interest
Let plug in the formula
Invoice price of the bond=$1,170+$25
Invoice price of the bond=$1,195
Therefore the Invoice price of the bond will be $1,195
