How can I solve this question with HB 10 bll financial calculator.

[Han03]

the question is

On july1 2016 A company issesd 700,000 of 12% bonds, dated July 1. Interest of 42,000 is payable semiammunaly on June 30 and Dec 31. THe bonds matures in theee years, on 30 June 2019. THe market interest rate for bonds of similar risk and maturity is 14%. The entire bond issue was purchased by United intergroup, Inc.

Interest    42000*4,76654 = 200195

principal face 700,000*0.66634 = 466438

present value of the bond is 666,633 

I have to get the present value using my caculator, how can i get that number?

[BartdB]

Hi,

700,000 is the FV.

Coupon payments are 42,000 (as you already stated)

There are 2 payments per year at 14% per annum:

Thus:

I/YR = 14

P/YR = 2  (PMT is semi-anually, thus 2 per year)

N = 6

PMT = 42,000  (positive as it is money you get from the bond)

FV = 700,000   (positive as it is money you get from the bond at the end)

solve for PV = -666,634.22 (negative because you pay this to buy the bond)

(to set P/YR, enter number and set it using orange shift on the PMT button)

EDIT:

Note 7% would be the interest for 1 period, so you could use 7% at 1 P/YR and it will yield the same result.

Regards.