Question

Log in Golam P serch P HomeMly AUM Chapter 0-20 CengageNOW eBook Calculator Issue Price The following terms relate to independent bond issues a. 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments b. 500 bonds; $1,000 face value; 8% stated rate; 5 years; semianeual interest payments c. 800 bonds; $1,000 face value; 8 % stated rate; 10 years; semiannual interest payments d. 2,000 bonds; $500 face value; 12 % stated rate; 15 years; semiannual interest payments Use the appropriate present value table: PV of $1 and PV of Annulty of $1 Required: Assuming the market rate of interest is 10 % , calculate the selling price for each bond issue. If required, round all calculations to the nearest dolar. Situation Selling Price of the Bond Issue C d. Previous Check My Work Submit Assignmen Save and Exi All work saved MacBook Air 44 F3 & % # 7 6 5 4 3 U Y T R E

Answer 1

Solution a:

Computation of bond price
Table values are based on:
n=	5
i=	10.00%
Cash flow	Table Value	Amount	Present Value
Principal	0.62092	$500,000.00	$310,460
Interest	3.79079	$40,000.00	$151,632
Price of bonds			$462,092

Solution b:

Computation of bond price
Table values are based on:
n=	10
i=	5.00%
Cash flow	Table Value	Amount	Present Value
Principal	0.61391	$500,000.00	$306,955
Interest	7.72173	$20,000.00	$154,435
Price of bonds			$461,390

Solution c:

Computation of bond price
Table values are based on:
n=	20
i=	5.00%
Cash flow	Table Value	Amount	Present Value
Principal	0.37689	$800,000.00	$301,512
Interest	12.46221	$32,000.00	$398,791
Price of bonds			$700,303

solution d:

Computation of bond price
Table values are based on:
n=	30
i=	5.00%
Cash flow	Table Value	Amount	Present Value
Principal	0.23138	$1,000,000.00	$231,380
Interest	15.37245	$60,000.00	$922,347
Price of bonds			$1,153,727