Question

A company issued 9%, 15-year bonds with a face amount of $100 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Enter your answers in whole dollars.) 5.88 points Table values are based on: Skipped eBook Amount Present Value References Cash Flow Interest Principal Price of bonds

Answer 1

	table values are based on
	n=	30
	i=	3%
	cash flow	Amount	PV
	interest	4,500,000	88201980
	principal	100,000,000	41199000
	price of bonds		129,400,980

Working

(note there will be slight difference in issue price calculation ,kindly use the factors as given
inn your question to get exact answer)
	Bond characterstics				Amount
1-a)	Principal				100,000,000
	interest				4,500,000
	Market interest rate				3%
	periods to maturity				30
	issue price				129,400,980
	Calculation of bond issue price
	Where
	i=	3.00%
	t=	30
	principal		*	PV of $1 at 3% for 30 yrs =
	100,000,000		*	0.41199		=	41199000
	interest		*	PV of ordinary annuity at 3%=
	4500000		*	19.60044		=	88201980
	bond issue price						129400980