A fixed-interest security bears interest of 10% per annum payable half-yearly in arrear. The security will be redeemed at 105% by five instalments, of equal nominal amount, on 31 July in each of...

Extracted text: A fixed-interest security bears interest of 10% per annum payable half-yearly in arrear. The security will be redeemed at 105% by five instalments, of equal nominal amount, on 31 July in each of theyears 2016 to 2020 inclusive. An investor, who is liable to income tax at the rate of 40%, purchasedthe entire security on 31 July 2006, immediately following the interest payment then due, at a price to obtain a net yield of 9% per annum effective. The present value of cash payable on redemption is , Select one: a. 166.3 O b. 154.5 c. 188.045 O d. 195.42 e. 173.89