Question

Book Calculator Issue Price The following terms relate to Independent bondines a. 490 bonds $1,000 face value: 8% stated rate; 5 years; annual interest payments b. 490 bonds: $1,000 face value: 8% stated rate; 5 years semiannual interest payments c. 780 bonds; $1,000 face value: 8% stated rate 10 years, semiannual interest payments d. 1,870 bonds; $500 face value, 12% stated rate; 15 years, semiannual interest payments Use the appropriate present value tablet PV of sind PV of Annuity of 1 Required: price for each bond issue. If required, mediate calculations and finalanse Assuming the market rate of interest is 10%, calculate the Situation Selling Price of the Bond Issue

Answer 1

Solution a:

Computation of bond price
Table values are based on:
n=	5
i=	10.00%
Cash flow	Table Value	Amount	Present Value
Par (Maturity) Value	0.62092	$490,000.00	$304,251
Interest (Annuity)	3.79079	$39,200.00	$148,599
Price of bonds			$452,850

Solution b:

Computation of bond price
Table values are based on:
n=	10
i=	5.00%
Cash flow	Table Value	Amount	Present Value
Par (Maturity) Value	0.61391	$490,000.00	$300,816
Interest (Annuity)	7.72173	$19,600.00	$151,346
Price of bonds			$452,162

Solution c:

Computation of bond price
Table values are based on:
n=	20
i=	5.00%
Cash flow	Table Value	Amount	Present Value
Par (Maturity) Value	0.37689	$780,000.00	$293,974
Interest (Annuity)	12.46221	$31,200.00	$388,821
Price of bonds			$682,795

Solution d:

Computation of bond price
Table values are based on:
n=	30
i=	5.00%
Cash flow	Table Value	Amount	Present Value
Par (Maturity) Value	0.23138	$935,000.00	$216,340
Interest (Annuity)	15.37245	$56,100.00	$862,394
Price of bonds			$1,078,735