Question

Spiller Corp. plans to issue 8%, 8-year, $570,000 par value bonds payable that pay interest semiannually on June 30 and December 31. The bonds are dated December 31, 2019, and are issued on that date. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "Table value" to 4 decimal places and final answers to nearest whole dollar.) If the market rate of interest for the bonds is 6% on the date of issue, what will be the total cash proceeds from the bond issue

	Table Values are Based on: n = i = Cash Flow Table Value Amount Present Value Present (maturity) value Interest (annuity) Total cash proceeds

Answer 1

Answer

• Requirement

Table Values are Based on:
n =	16	[because 8 years x 2 semi annual payments each year = 16]
i =	3%	[because 6% market rate semi annually = 6% x 6/12]
Cash Flow	Table Value	Amount	Present Value
Present (maturity) value	0.6232 [PV$1, 3% for 16th period]	$570,000	$355,224
Interest (annuity)	12.5612 or 12.5611[PVA $1, 3% for 16th period]	$22,800	$286,395 (or $ 286,393)
Total cash proceeds			$641,619 (or $641,617)