Find the current NBV of the bond to Geralt

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Geralt issues a bond with a face value of $5,000, stated semi-annual rate of 6% when the current market rate is 7%. The bond lasts 5 years and pays interest semi-annually. What cash will Geralt receive on issuance? After two periods (one year), Yennefer (Geralt's parent) buys the bond when the prevailing interest rate was 5%. What gain or loss on the repurchase does the consolidated entity recognize? (losses are negative).

Hint: Find the PV of the future cash flows to find the purchase price, and find the current NBV of the bond to Geralt.

Reference no: EM133307267

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