Question

Complete the below table to calculate the price of a $1.9 million bond issue under each of the following Independent assumptions (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of SD (Use appropriate factor(s) from the tables provided.): 1. Maturity 13 years, Interest paid annually stated rate 9%, effective market rate 12% 2. Maturity 9 years, interest paid semiannually stated rate 9%, effective market) rate 12% 3. Maturity 7 years, Interest pald semiannually stated rate 11%, effective market) rate 12% 4. Maturity 15 years, interest paid semiannually stated rate 11%, effective market) rate 12% 5. Maturity 10 years, Interest paid semiannually, stated rate 11%, effective market) rate 11% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Maturity 13 years, interest paid annually, stated rate 9%, effective (market) rate 12%. (Round your answers to the nearest whole dollar) Table values are based on: Amount Present Value Principal Price of bonds

Answer 1

Solution 1:

Computation of bond price
Table values are based on:
n=	13
i=	12.00%
Cash flow	Table Value	Amount	Present Value
Interest	6.42355	$171,000.00	$1,098,427
Principal	0.22917	$1,900,000.00	$435,423
Price of bonds			$1,533,850

Solution 2:

Computation of bond price
Table values are based on:
n=	18
i=	6.00%
Cash flow	Table Value	Amount	Present Value
Interest	10.82760	$85,500.00	$925,760
Principal	0.35034	$1,900,000.00	$665,646
Price of bonds			$1,591,406

Solution 3:

Computation of bond price
Table values are based on:
n=	14
i=	6.00%
Cash flow	Table Value	Amount	Present Value
Interest	9.29498	$104,500.00	$971,325
Principal	0.44230	$1,900,000.00	$840,370
Price of bonds			$1,811,695

Solution 4:

Computation of bond price
Table values are based on:
n=	30
i=	6.00%
Cash flow	Table Value	Amount	Present Value
Interest	13.76483	$104,500.00	$1,438,425
Principal	0.17411	$1,900,000.00	$330,809
Price of bonds			$1,769,234

Solution 5:

Computation of bond price
Table values are based on:
n=	20
i=	5.50%
Cash flow	Table Value	Amount	Present Value
Interest	11.95038	$104,500.00	$1,248,815
Principal	0.34273	$1,900,000.00	$651,185
Price of bonds			$1,900,000