On January 1, Year 1, Weller Company issued a two year $1,000,000 bond. The annual coupon...
On January 1, Year 1, Weller Company issued a two year $1,000,000 bond. The annual coupon payments have a stated rate of 6% and the market rate is 5%. What is the present value (as of January 1, Year 1) for the Year 1 coupon payment?
Homework Answers
Answer: $57,144
Calculations:
Coupon payment = Face value x Stated rate = $1,000,000 x 6% = $60,000
Present value for the year 1 coupon payment = Year 1 Coupon payment x Present value factor at 5% for 1 period.
=$60,000 x 0.9524
=$57,144
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