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Dempsey Railroad Co. is about to issue $320,000 of 6-year bonds paying an 10% interest rate, with interest payable semia...

Dempsey Railroad Co. is about to issue $320,000 of 6-year bonds paying an 10% interest rate, with interest payable semiannually. The discount rate for such securities is 8%.

(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

How much can Dempsey expect to receive for the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,525.)

Dempsey can expect to receive $

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Answer #1

Basic Data Interest for 6 Months= (320000*10%)*6/12 = 16000 Present Value of Annuity Factor for 6 Months frequency is 4% (1,eAlternative Answer Period Interest @5% Present Value annuity Factor@4% Present Value A*B 16000 0.96154 15384.615 16000 0.9245

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