Answer :
Shortfall of money = $74,598
Explanation :
As per the data given in the question,
Par value of bond = $7,472,582
To determine the future value of annual coupon payments received, we will use FV of annuity's formula
FV of Annuity = P [(1 + r)^n- 1 ÷ r]
where,
P = Periodic payment
r = interest rate
n = Time period
here P = 6% of $7,472,582 = $448,354.92
r = 4.50%
n = 5 years
FV of Annuity = $448,354.92 × [(1 + 4.50%)^5 - 1) ÷ 4.50%]
=$2,452,820
Shortfall at the end of 5 years is
= $10,000,000 - $7,472,582 - $2,452,820
= $74,598
