Question

On December 31, 2021, Interlink Communications issued 5% stated rate bonds with a face amount of $115 million. The bonds mature on December 31, 2051. Interest is payable annually on each December 31, beginning in 2022. (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.)

Determine the price of the bonds on December 31, 2021, assuming that the market rate of interest for similar bonds was 6%. (Round your final answers to nearest whole dollar amount.)

On December 31, 2021, Interlink Communications issued 5% stated rate bonds with a face amount of $115 million. The bonds mature on December 31, 2051. Interest is payable annually on each December 31, beginning in 2022. (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.) Determine the price of the bonds on December 31, 2021, assuming that the market rate of interest for similar bonds was 6%. (Round your final answers to nearest whole dollar amount.) X Answer is complete but not entirely correct. Table values are based on: n = 30 i = 6% Cash Flow Amount Interest 5,750,000 115,000,000 Present Value $ 374,046 2 0,022,650 $ 20,396,696 X Principal Price of bonds

Please explain including which table you used. Thank you!

Answer 1

Computation Of Bond Price
a	Annual Interest Amount	$                57,50,000
	($115000000*5%)
b	PV Annuity Factor for (30 Years,6%)	13.76483
c	Present Value Of Annual Interest (a*b)	$            7,91,47,773
d	Redemption Value	$    11,50,00,000.00
e	PV Factor Of (30 Years,6%)	0.17411
g	Present Value Of Redemption Amount (d*e)	$      2,00,22,650.00
f	Intrinsic Value ( Price ) Of The Bond (c+g)	$            9,91,70,423
	Table values are based on:
	n =	30
	i =	6.0%
	Cash Flow	Amount	Present Value
	Interest	$                57,50,000	$   7,91,47,773
	Principal	$          11,50,00,000	$   2,00,22,650
	Price of bonds		$   9,91,70,423