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Answer is 4.61 as listed above, just need help on how they got that for...

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Accounting

imageAnswer is 4.61 as listed above, just need help on how they got that for this question, thanks!

4 years ago, you paid $1065 for a $1,000 par bond that has a 5% coupon with semiannual payments. You are selling it today for $1069. You reinvested coupons at the 2.5% annual rate. What is your total return? (Report your answer to two decimals, without the % symbol. E.g., if your answer is 5.1538%, enter it as 5.15.) X 5.38 Answer Key:4.61 Feedback: First, find FV of reinvested coupons first (I/Y = half of the annual reinvestment rate, N = number of coupons you received, PMT = semiannual coupon pmt in $). Next, find the total return: TR = ([(FVcpns + Selling Price)/Purch.Price]^(1/2N) - 1)*2 Multiplying by 2 annualizes semiannual return If you use TVM keys to find TR, FV = FVcpns + Selling Price, PV = PurchPrice, N = number of coupons you received, PMT = 0 (because the value of reinvested coupons is part of FV); cpt I/Y, double to annualize

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