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The company could issue $2,000,000 of long-term bonds, due in 5 years with a stated rate...

The company could issue $2,000,000 of long-term bonds, due in 5 years with a stated rate of interest, paid semiannually, of 4%. The market rate for similar debt is 6%. Find the following: Face amount-

Face rate-

Interest Payment periods-

Interest Payment-

Term Periods-

Market rate-

PV factors used-

PV Face-

PV Interest-

Single Sum Annuity-

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Answer #1
Face Amount- $2,000,000.00
Face rate- 4.00%
Interest Payment periods- 2
Interest Payment- $2,000,000 x 4%/2 $40,000.00
Term Periods- (5 x 2) 10
Market rate- 6.00%
PV factors used-
PV Face- $2,000,000 x PV(3%,10) $1,488,187.83
PV Interest- $40,000 x PVOA(3%,10) $341,208.11
Present Value of Bond $1,829,395.94
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