ABC Inc issues $500,000 of 11% bonds that are due in 10 years. These bonds pay...
ABC Inc issues $500,000 of 11% bonds that are due in 10 years. These bonds pay interest on a semi- annually basis. At the time of issue, the market rate for such bonds were 10%. Please calculate the bonds’ issue price. Excel spreadsheet function to be used.
Homework Answers
| Price of bond is the present value of bonds cash flow which is calculated as follows: | ||||||
| Price of bond | =-pv(rate,nper,pmt,fv) | Where, | ||||
| =-PV(5%,20,27500,500000) | rate | 5% | ||||
| =$ 5,31,155.53 | nper | 20 | ||||
| pmt | $ 27,500 | |||||
| fv | $ 5,00,000 | |||||
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ABC Inc issues $500,000 of 11% bonds that are due in 10 years.
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Help Save & Ext Submit Hillside Excursions issues bonds due in 10 years with a stated...
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Brief Exercise 14-3 Ayayai Corporation issues $400,000 of 9% bonds that are due in 8 years and pay interest semi-annually. At the time of issue, the market rate for such bonds is 8%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Calculate the bonds' issue price by using (1) factor Tables A.2 and A.4, (2) a financial calculator, or (3) Excel function PV....
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