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Annapolis Company purchased a S5,000, 8%, 10-year bond at 103 and held it to maturity. The straight line method of amortization is used for both premiums & discounts. What is the net cash received over the life of the bond investment? (all money received minus all money paid, round to nearest whole dollar) Your Answer
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$5000 Bond Purchased @ 103 means, Bond Value of $100 is purchased @ $103. Therefore, Cash outflow in Yr-0 will be 5000x103/100 = 5150.Year Particulars Icash flow PVF @ 8% Discounted Cash Flow (5150) 2684 2316 (150) 0 Cash Outflow (550)1.00 1-10 Cash Inflow 4006.7101 50000.4632 10 Cash Inflow NET CASH FLOWS Present Value Annuity Factor for 1-10 yrs @ 8%

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