Question

14-1
Complete the below table to calculate the price of a $1.7 million bond issue under each of the following independent assumptions (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.Enter your answers in whole dollars.): 1. Maturity 16 years, interest paid annually, stated rate 10%, market rate 12% Table values are based on: 16 10.0% Cash Flow Interest Principal Amount Present Value Price of bonds

Answer 1

req 1.
Price of bonds
n= 16
i= 12%
Cashflow			Amount	Present value
Interest (1700000*10%))			170000	1185578	(170000*6.97399)
Principal			1700000	277307.4	(1700000*0.163122)
price of bonds				1462886
Req 2.
Price of bonds
n= 10
i= 6%
Cashflow			Amount	Present value
Interest (1700000*10%*6/12))			85000	625607.7	(85000*7.36009)
Principal			1700000	949271.5	(1700000*0.558395)
price of bonds				1574879
Req 3.
Price of bonds
n = 12
i= 5%
Cashflow			Amount	Present value
Interest (1700000*12%*6/12))			102000	904051.5	(102000*8.86325)
Principal			1700000	946622.9	(1700000*0.556837)
price of bonds				1850674
req 4.
Price of bonds
n = 30
i= 7%
Cashflow			Amount	Present value
Interest (1700000*12%*6/12))			102000	1265722	(102000*12.40904)
Principal			1700000	223323.9	(1700000*0.131367)
price of bonds				1489046
req 5.
Price of bonds
n = 30
i= 6%
Cashflow			Amount	Present value
Interest (1700000*12%*6/12))			102000	1404013	(102000*13.76483)
Principal			1700000	295987	(1700000*0.17411)
price of bonds				1700000