Answer:
The value of the bonds is $ 877,814.
Explanation:
The value of bond can be calculated by discounting all future cash flow using effective rate of retun. Detail calculations are given below.
Future Value = Redemption present value (RPV) + Present value of interest (PVI)
RPV = 1,000,000 (1+11%)^-3 = $ 731,191 -A
PVI = 60,000 * Annuity factor = 146,623 -B
Future Value = A + B = $ 877,814
Annuity factor = (1- (1+i%)^-n)/i% = (1- (1+11%)^-3)/11% = 2.444
