First, we will determine the amount paid in a year. Since there are equal payments of 5000 in six months intervals we have that in a year there will be:
[tex]5000\times2=10000[/tex]That means that we have 10000 per year. Now we multiply by the number of years to get the total payments:
[tex]10000\times20=200000[/tex]Therefore, the total amount paid will be 200000.
Now we subtract the total payments from the face amount and we get:
[tex]450000-200000=250000[/tex]Now, since the market rate is 2% we get the 2% from the 250000:
[tex]250000\times\frac{2}{100}=5000[/tex]Therefore, the fair price is 5000.
