Determine the bonds face value

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Reference no: EM13200864

A bond is purchased for $9,855.57. It is kept for 5 years and interest is received at the end of each year. Immediately following the owner's receipt of the fifth interest payment, the owner sells the bond for $500 less than its par value. The bond rate of interest is 8% and the owner's money yields a 10% interest rate.

A. Draw a clear completely labeled cash flow diagram of the entire bond transcation using dollar accounts where they are are known and $X to represent the bond's face value.

B. Determine the bond's Face Value.

Reference no: EM13200864

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