Confusing bond questions... set, investor, payments, question

needhelp1700

When doing bond questions, I am always confused whether to set PV=0 or not, for example:
A firm has $3 million in outstanding 10year bonds, with a fixed rate of 8 percent (assume annual payments). The bonds trade at a price of $92 per $100 par in the open market.
To calculate the required return, you do this: PV 92, N10, FV100, PMT 8 compute I/Y
…………………………………………
Now, if we look at this question:
An investor purchases a $1,000 par value accrual bond with a 3year maturity. The bond pays 5% interest compounded semiannually at the bonds maturity. Calculate the amount that will be received on maturity.
The answer is 1[2nd][N], 6[N], 2.5[I/Y], 25[PMT], 0[PV], [CPT][FV] = 159.69
So PV is set as 0 here…I don’t know what’s the difference? I thought the investor put down money today in both situations?
Thanks for answering!

ramdabom

so you mean, if the 2nd question is asking for actually FV(not the amount of cash received in the end), the PV should not be 0?
Sorry i’m still confused…

dmar

okay, let me try again.
The second question states that it’s an accrual bond that pays at the bond’s maturity (you don’t receive your coupon payments until the end), so this makes it a bit different than a normal calculation. Normally, you will just receive par at maturity. The question is really just asking for the amount of accrued interest that you will receive at maturity.
So you could do the calculation with
PV = 1000
PMT = 0
I/Y = 2.5
N = 6
cpt FV –1159.69
but subtract your principle payment from that, and you’re left with the accrued interest of 159.69
Does that make sense?