2,675,000 - 39,694 = 2,635,306 to be funded.
The par value bought of the Sept 2020 bond will thus be:
Par
Sept20
= 2,635,306 ÷ (1 + (0.0248/2)) = 2,603,028
This answers the question. We need 2,603,028.
To illustrate the process, we can show the calculation for the third longest liability as well:
The coupon on the September 2020 bond will be 2,603,028 × (0.0248 / 2) = 32,278
The March 2020 coupons on the September 2020 and March 2021 bonds will total 32,278 +
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