A company has in issue loan notes with a nominal value of $100 each. Interest on the loan notes is 6% per year, payable annually. The loan notes will be redeemed in eight years’ time at a 5% premium to nominal value. The before-tax cost of debt of the company is 7% per year.

What is the ex interest market value of each loan note?

A. $94·03
B. $96·94
C. $102·91
D. $103·10