Present value of a 4% annual coupon bond at 7%

A bond with face value $3000 matures in five years and pays an annual coupon of $4\%$ of face. Market rates are $7\%$ per year, compounded annually. What is the bond's present value, to the nearest cent?

$2630.98. The coupons are $120 a year, worth $\sum_{n=1}^5 120/1.07^n\approx492.02$, and the face repayment is worth $3000/1.07^5\approx2138.96$. Because the coupon rate is below the market rate, the bond trades at a discount.