On January 1, 2020, Shamrock Corporation purchased 321 of the $1,000 face value, 10%, 10-year bonds...
On January 1, 2020, Shamrock Corporation purchased 321 of the $1,000 face value, 10%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2030, and pay interest annually beginning January 1, 2021. Shamrock purchased the bonds to yield 11%. How much did Shamrock pay for the bonds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Shamrock must pay for the bonds $enter a dollar amount should be paid for the bonds
Homework Answers
| Amount | PV factor 11% | Present value | |
| Annual interest | 32100 | 5.88923 | 189044 |
| Principal | 321000 | 0.35218 | 113050 |
| Total | 302094 | ||
| Shamrock must pay for the bonds | 302094 | ||
| Workings: | |||
| Annual interest | 32100 | =321000*10% | |
| PV factor 11%: | |||
| Annual interest | 5.88923 | =(1-(1.11)^-10)/0.11 | |
| Principal | 0.35218 | =1/1.11^10 | |
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