Question

Complete the below table to calculate the price of a $1.1 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 15 years, Interest paid annually, stated rate 8%, effective market) rate 12% Table values are based on: 15 12.0% Cash Flow Amount Interest $ 88,000 Principal $ 1,100,000 Price of bonds Present Value Maturity 15 years, Interest pald semiannually, stated rate 8%, effective market) rate 2-12% Table values are based on: 30 6.0% Cash Flow Amount Interest S 44,000 Principal $ 1,100,000 Price of bonds Present Value

*** I NEED HELP WITH THE INTEREST/PRINCIPAL PRESENT VALUES & PRICE OF BONDS *****

Answer 1

1. Present value of Interest= PVAF of 88000 @ 12% for 15 years = 88000*6.81086448916 = $599,356

Present value of Principal= PVF of 1100000 @12% for 15th year =1100000*0.18269626123 = $200,966

Price of Bonds:- $599,356 + $200,966 = $800,322

2. Present value of Interest = PVAF of 44000 @ 6% for 30 terms = 44000*13.7648311492 = $605,653

  Present value of Principal = PVF of 1100000 @6% for 30th term =1100000*0.17411013083 = $191,521

Price of Bonds = $605,653 + $191,521 = $797,174

3. Present value of Interest = PVAF of 55000 @ 4% for 10 terms = 55000*8.11089577907 = $446,099

  Present value of Principal = PVF of 1100000 @4% for 10th term = 1100000*0.67556416878 = $743,121

Price of Bonds = $446,069 + $743,121 = $1,189,220

4. Present value of Interest = PVAF of 55000 @ 4% for 20 terms = 55000*13.5903263437 = $747,468

  Present value of Principal = PVF of 1100000 @4% for 20th term = 1100000*0.45638694612 = $502,026

Price of Bonds = $747,468 + $502,026 = $1,249,494

5. Present value of Interest = PVAF of 55000 @ 5% for 20 terms = 55000*12.4622103416 = $685,422

  Present value of Principal = PVF of 1100000 @5% for 20th term = 1100000*0.37688948281 = $414,578

Price of Bonds = $685,422 + $414,578 = $1,100,000