horseking

N=4; I/Y=7; PMT=10M*6%=.6M; FV=10M --> PV=-9,661,279

 

int expense = 9,661,279 * 7% = 676,290

 

coupon payment = 10M * 6% = 600,000

 

diff = 76,290

 

book value of the bonds at the end of the period :

=9,661,279 + 76,290 = 9,737,569.

 

the book value is not related to the current market yield