A Rs 1000 face value bond bearing a coupon rate is 10% p.a. will mature in 5 years. IF the discount rate is 15% p.a., find the present value of the bond.

₹832.40

The correct answer is option (4) : ₹832.40

Given $F= ₹1000, r= 10$% p.a, $N=5\, years $

$d= 15$%p.a, $i= 0.15$

$C=F×\frac{r}{100}=1000×\frac{10}{100}=₹100$

$P.V=\frac{100[1-(1.15)^{-5}]}{0.15}+1000(1.15)^{-5}$

Let $x= (1.15)^{-5}$

Taking log on both sides

$log\, x = -5log 1.5$

$=-5×0.0607$

$=-0.3035$

$log\, x = T.6935$

$x= amtilog\, \overline{1}.6935$

$x= 0.4972$

$P.V.\frac{100[1-0.4972]}{0.15}+1000×0.4972$

$=\frac{100×0.5028}{0.15}+497.2$

$=335.20+497.20$

$=₹832.40$