An indexlinked bond of nominal was issued on July and it was repaid at on July Interest on the bond was payable at each anniversary ie in July of each year at a rate of per annum.
An investor liable to income tax at a rate of has purchased the bond at issue and held it to redemption.
Interest and capital payments were indexed by reference to the value of an inflation index with a time lag of months. The value of the inflation indexes at various dates during the term of the loan were as follows:
Inflation indexes for
January
July
Calculate the price paid at issue for the bond, given that the investor has achieved an effective money yield of per annum from this investment.
