Question

On January 1, 2018, frontier world issues $40.5million of 7% bonds due in 10 years with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride , a dark tunnel , and the great smell of outdoor barbecue all in one ride.

Answer 1

Face Amount = FV = $ 40,500,000

Interest Payment = PMT = $ 14,17,500

Market Interest Rate= I = 3.5%

Periods to maturity = N = 20

Issue Price : $ 4050,0000

YEAR	INTEREST	PVAF	Issue Price
1	14,17,500	0.96618358	1369565.22
2	14,17,500	0.9335107	1323251.42
3	14,17,500	0.90194271	1278503.79
4	14,17,500	0.87144223	1235269.36
5	14,17,500	0.84197317	1193496.96
6	14,17,500	0.81350064	1153137.16
7	14,17,500	0.78599096	1114142.19
8	14,17,500	0.75941156	1076465.88
9	14,17,500	0.73373097	1040063.65
10	14,17,500	0.70891881	1004892.42
11	14,17,500	0.68494571	970910.55
12	14,17,500	0.6617833	938077.825
13	14,17,500	0.63940415	906355.387
14	14,17,500	0.61778179	875705.687
15	14,17,500	0.59689062	846092.452
16	14,17,500	0.57670591	817480.63
17	14,17,500	0.55720378	789836.357
18	14,17,500	0.53836114	763126.916
19	14,17,500	0.52015569	737320.691
20	14,17,500	0.50256588	712387.141
20	405,00,000	0.50256588	20353918.3
Issue Price			40500000