Ten-year bonds with a face value of $500,000 were issued at 96.The carrying value of the bond after the second year of interest payments is:

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The carrying value of a bond is the present value of its future cash flows. The future cash flows of a bond are its coupon payments and its face value. The coupon payments are fixed and are paid semi-annually. The face value is paid at maturity. The present value of a bond is calculated using the following formula:PV = C * [1 - (1 + r)^-n] / r + FV / (1 + r)^nwhere:PV is the present value of the bondC is the coupon paymentr is the yield to maturityn is the number of years to maturityFV is the face value of the bondIn this case, the face value of the bond is $500,000, the coupon rate is 6%, and the yield to maturity is 8%. The bond was issued at 96, which means that it was sold for $480,000. After the second year of interest payments, the carrying value of the bond is $484,000.

Ten-Year Bonds with a Face Value of $500,000 Were Issued