Question

Does anyone know how to do this problem using BA II plus calculator, if yes, please write down the steps. Thanks.

Jet Company decides to sell 100,000 of 5-year 12% bonds that pay semiannual interest when the effective interest rate is also 12%.

Answer 1

The selling price is computed as follows:
Step:1)Present value of principal: $100,000 × 0.558395 =$ 55,839.50
Step:2)Present value of interest(Present Value of an Ordinary Annuity

(n = 10; i = 0.06)) : $6,000 × 7.360087 =44,160.50

Step:3)Selling Price =$100,000.00(55839.5+44160.5)

Now how to do this problem using BA II plus calculator:

To calculate PV of principal (maturity value ) :

1)You should make sure that the financial registers are clear. To do this, press 2nd and FV.

2)Enter the number 100000 and press FV

3)Enter 6 and press I/Y

4)Enter 10 and press N

5)Enter 0 and press PMT.

6)To solve, press CPT and PV. Your answer should be $55,839.50

To calculate PV of interest :

1)You should make sure that the financial registers are

clear. To do this, press 2nd and FV

2)Enter the number 6000 and press PMT

3)Enter 6 and press I/Y

4)Enter 10 and press N

5)Enter 0 and press FV

6)To solve, press CPT and PV. Your answer should be -$44,160.50

You get the PV of Maturity value and Semi-annual interest,add them both to get the issue price or selling price of bonds.

IN CASE OF ANY DOUBTS OR CORRECTIONS FEEL FREE TO COMMENT BELOW

PLEASE RATE MY ANSWER BY HITTING ??

THANK YOU