Where does the inital -0.9696 come from in the solution? I had correctly accounted for the other parts of that formula but missed it because I overlooked a step apparently. At first glance it appears that it’s the final discount rate subtracted a second time. Is that to account for the principal payment? Any clarity would be greatly appreciated. Thanks folks!
Because treat it like a fixed bond, now at end of its life you return the pricipal amount. So e.g you issued $1 bond for simplicity with quater payment. The 4 discount factor will discount your 4 quater coupon payments and the seprate 0.9696 is used to discount the principal that is $1 u have to pay at end of life.