On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $340 million.
On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $340 million. The bonds mature on September 30, 2041 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. (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.)
Required: Determine the price of the bonds on September 30, 2021. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)
Homework Answers
| n | 40 | |
| i | 5% | |
| Cash flow | Amount | Present value |
| Interest | 34000000*8%*6/12 = 13600000 | 13600000*17.159 = $233362400 |
| Principal | 340000000 | 340000000*0.1420 = 48280000 |
| Price of bonds | $281642400 | |
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