What is the expected last cash flow of a 10-year bond that pays coupon interest semiannually, has a coupon rate of 7%, and has a par value of $100,000?

(Round answer to 2 decimals)

Question

What is the expected last cash flow of a 10-year bond that pays coupon interest semiannually, has a coupon rate of 7%, and has a par value of $100,000?

(Round answer to 2 decimals)

BlackTom AI · Accepted Answer

We start by identifying the bond’s key details: a 10-year term, semiannual coupon payments, a 7% annual coupon rate, and a par value of $100,000.

First, determine the semiannual coupon payment. The annual coupon is 7% of par, which equals 0.07 × 100,000 = 7,000 per year. Since payments are semiannual, divide by 2: 7,000 / 2 = 3,500 every half-year.

Next, consider the last cash flow. For a standard bond, the final payment at maturity consists of the last coupon payment plus the return of the par value. The coupon for the last period is the same 3,500, and the principal repaid is 100,000.

Therefore, the last cash flow equals the final coupon payment plus the par value: 3,500 + 100,000 = 103,500.

Rounded to two decimals, this amount remains 103,500.00. Note that this calculation assumes standard convention with coupon payments exactly at each semiannual period and full par repayment at maturity; it does not require any discounting or yield considerations for this particular question, since it asks for the cash flow amount rather than present value.

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What is the expected last cash flow of a 10-year bond that pays coupon interest semiannually, has a coupon rate of 7%, and has a par value of $100,000? (Round answer to 2 decimals)

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