kickthatcfa

I choose C

Equity value:

982/985 * 2,000,000 = 1,993,908.65

Fixed value

You know the payment semi annually = 4.4% x 2,000,000 x 180/360 = 44,000

So we have two payments to be received,

1. 44,000 at 180 day and 2. 2,044,000 at 360 day

So discount both of them till today

1. 44000/(1+0.046 x 90/360) = 43499.75

2. 2,044,000/(1+0.048 x 270/360) = 1,972,972.97

Add both of them = 2,016,472.72

Now since we are going to receive the fixed payment and make the equity payment, the answer is 2,016,472.72 - 1,993,908.65 = 22,564.07



Edited 1 time(s). Last edit at Thursday, May 13, 2010 at 11:23PM by idreesz.