Question

Check my work A company issued 9%, 20-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. EVA of $1. PVA of $1. EVAD of S1 and PVAD of $1 (Use appropriate factor(s) from the tables provided. Enter your answers in whole dollars.) Table values are based on: 3.0% Amount 4,500,000 100,000,000 Cash Flow Interest Principal Price of bonds Present Value $ $

Answer 1

	table values are based on
	n=	40
	i=	3%
	cash flow	Amount	PV
	interest	4,500,000	104,016,465.00
	principal	100,000,000	30,656,000
	price of bonds		134,672,465

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				40
	issue price				134,672,465
	Calculation of bond issue price
	Where
	i=	3.00%
	t=	40
	principal		*	PV of $1 at 3% for 40 yrs =
	100,000,000		*	0.30656		=	30656000
	interest		*	PV of ordinary annuity at 3%=
	4500000		*	23.11477		=	104016465
	bond issue price						134672465