Cure All General Hospital has been forced to fife for bankruptcy protection. The company managing the hospital has been allowed to reorganize under the name United Hospital of Hope. The courts have specified that a new indenture should be written to accompany a planned new bond issue. The issue would have ten years to maturity and carry a 10% coupon that would be paid annually. The new agreement would relieve the company of the obligation to make interest payments during the first five years after the bond is issued. For the remaining five years, regular interest payments would resume. Finally, at maturity, the principal ($1000) plus the interest that was not paid during the first five years would be paid. However, no additional interest would be payable on the deferred interest. If the bond’s YTM is 10%, its value is closest to:（）
A. $778.31.
B. $813.69.
C. $827.54.
参考答案：B
解析：
This bond has no cash flows for the first five years. It then has a $100 cash flow for years 6 through 10. Additionally, the accrued interest ($500) that wasn’t paid in the first five years would have to be paid at the end, along with the principal. The required inputs are CF0=0, CF1=0, F1=5, CF2=100, F2=4, CF3=1600, F3=1, NPV, I=10%, CPT. Note that CF3 is made up of the principal ($1000) plus the remaining $100 coupon plus the accrued interest (S500) that was not paid during the first five years of the bond’s life.