when the market rate of interest was 11% waverly corporation issued $1,000,000 12%-5-year bonds that pay interest semian...
when the market rate of interest was 11% waverly corporation issued $1,000,000 12%-5-year bonds that pay interest semiannually. The selling price of this bond
Homework Answers
In the given question we have to calculate the selling price of the bond
The selling price of bond
= ( interest payment × present value annuity ( 5.5%,10)) + ( face value/(1+5.5%)^10)
=((1000000×.06)×((1-(1.055)^-10)/.055))+(1000000/(1
055)^10)
=( 60000×7.53763)+(1000000×58543)
=452257.55+585430.58
= $ 1037688.13
Thus the correct answer is $ 1037688.13 ( rounded off to 2 decimal places)
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