00:01
Okay, so first we find the present value of the annual coupon payments.
00:04
So for each year from 1 to 10, we'll discount the coupon payment of $75 at the interest rate of 9%.
00:10
So for the first year, we take 75, divide by, so 1 plus the rate, so 1 plus 0 .09, raised to just the first power, which is going to be about 68 .41.
00:23
And then for year two, we take 75, divide it by 1, plus 0 .03, raised to the second power of 3.
00:33
For the third year, we take plus 1 .09 to the third power, all the way to the year 10, which is going to be 75, divide it by 1, plus 0 .09, to the 10th power, which is going to be about 31 .66...