This question asks: what are the proceeds of a $5000 eight-year note bearing interest at 8%, compounded quarterly, discounted three and a half years after the date of issue at 6% compounded monthly.
Attack: first find the maturity value after eight years. Then discount.
Step 1: maturity value
The PV is 5000
The PY/CY is 4 because the note is compounded quarterly
The N is 8 * 4 = 32
The IY is 8
CPT FV = 9422.7
Step 2: the note was sold off 3.5 years after issue. That means 4.5 years BEFORE the maturity date (because 8 - 3.5 = 4.5). The 4.5 is the date on which we want the present value. Note carefully that we now use the interest rate for the new terms.
FV 9422.7
The PY/CY is 12 because the new interest rate is compounded monthly
The IY is 6
The N is 4.5 * 12 = 54
CPT PV 7197.94
That is the answer: $7197.94
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