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Sir, in example 12 why do we take into account the interest for the year 2007? Is interest always paid at the year end?
We do not take into account the interest for the year 2007, and I do not take it into account in my lectures working through this example. (The interest for 2007 would only be relevant if the question asked for a cum int valuation, but that would be unusual and if not written then we always assume market values are ex int.)
There is interest for 2008, 2009, and 2010.
In real life interest is often paid half-yearly, but as I explain in my lectures in the exam we assume that it is paid yearly at the end of each year.
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