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Expand coupon plus redemption
The promised payments are 5, 5 and 105 in years one, two and three. The annual spot rates apply to cumulative horizons from today. This differs from discounting each single year at its corresponding spot percentage.
Evaluate every dated term
| Year | Discount expression | PV |
|---|---|---|
| 1 | 5 / 1.04 | 4.807692 |
| 2 | 5 / 1.05² | 4.535147 |
| 3 | 105 / 1.06³ | 88.160025 |
| Total | Sum of the three PVs | 97.502864 |
Check the last payment
The final coupon must not be omitted or added a second time. Using 100 instead of 105 in the final row understates value by 5D3. Adding a separate year-three coupon when the final row already contains 105 overstates it by the same amount.
Report the conditional price
The result assumes fixed payments, annual effective rates and today’s valuation date. No credit spread, optional redemption or accrued-interest adjustment is supplied. It is a teaching price under the stated curve, rather than a quotation for a named issuer.