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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Q.36) AWP Co. (BPP Kit)
In this question, For option 1) I have used risk free rate of 5.3% + 0.6% = 5.90% as the yield factor and discounted the cashflows using 5.90%. I did the similar thing for Option 2) getting a discount factor of 5.01% (4.5%+0.51%)and got the issue price of the bonds through reverse working. However, in the suggested answer, they have used some really complicated method to arrive at the same answer. Can you tell me if my method is correct, or was it just a coincidence to get the same answer? Thank you
What you have done is fine – it is not a coincidence 🙂