**Answer:**

**Value of treasury Note =$ 746,617.36 **

**Explanation:**

<em>The value of the notes is the present value of future cash flow discounted at its YTM of 11%. The value of the Note is the present value of the future cash receipts expected from the it.</em>

The value is equal to present values of interest payment and the redemption value (RV).

**Value of Notes = PV of interest + PV of RV **

The value of Note can be worked out as follows:

Step 1

Calculate the PV of Interest payment

Present value of the interest payment

PV = Interest payment × (1- (1+r)^(-n))/r

r-Yield to Maturity, n- number of years

Interest payment = 3% × $1,000,000 × 1/2= $15000 .

Semi-annual interest yield = 11%/2 =5.5%

PV = 15,000 × (1 - (1.055)^(-3×2)/0.055) =

Step 2

PV of redemption Value

PV of RV = RV × (1+r)^(-n)

= 1,000,000 × (1.055)^(-4× 2)

= 651,598.87

Step 3

Calculate Value of the Notes

= 95,018.49 + 651,598.87

= $ 746,617.36

**Value of treasury Note =$ 746,617.36 **