Question

Brief Exercise G-17, please explain thoroughly!

Brief Exercise G-17 Crane Company issued 8%, 8-year, $2,726,800 par value bonds that pay interest semiannually on October 1 and April 1. The bonds are dated April 1, 2019, and are issued on that date. The discount rate of interest for such bonds on April 1, 2019, is 10%. Click here to view the factor table 1. Click here to view the factor table 2. Click here to view the factor table 3. Click here to view the factor table 4. What cash proceeds did Crane receive from issuance of the bonds? (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 5.24571. Round answer to o decimal places, e.g. 125.) Cash proceeds from issuance of the bonds Click if you would like to Show Work for this question: Open Show Work

Answer 1

Cash proceeds from the issuance of the bonds = Present value of interest at 5%, 16 years + Present value of maturity amount at 5%, 16 years

= 2726800*8%*6/12*10.83777 + 2726800*0.45811

= $2431272