Reading 31 - Non current liabi. - Present Value at Market Rate

CFA Level I FRA
#1

Good morning,

Face value (principal): £1,000,000

Time to maturity:5 yearsCoupon rate: 5%

Market rate at issuance: 6%

Frequency of interest payments:annualInterest payment: £50,000

For the first period, they calculated a present value at market rate (6%) at £47,170

How to calculate that ? (page 591)

thanks:)

.

#2

It’s simply the PV of the first interest payment: 50,000 / 1.06 = 47,169.81 ~ 47,170.