Question
In: Accounting
Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments
500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments
800 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments
2,000 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments
Required:
Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. Refer to the tables above for present value factors. If required, round all calculations to the nearest dollar.
Solutions
Expert Solution
| 500 Bonds; $1000 Face Value; 8% Stated Rate; 5 Years; Annual Interest Payments: | ||
| Face Value | 1000 | |
| Stated Rate | 8% | |
| Interest Payments | Annual | |
| Coupon Rate | 8% | |
| Coupon Interest | 80 | |
| Maturity Period | 5 years | |
| Period | 5 | |
| Market Rate | 10% | |
| Selling Price: | ||
| PVAF (10%, 5) | 3.790786769 | |
| PV of Interest (80* 3.790786769) | 303.2629415 | |
| PVIF (10%, 5) | 0.620921323 | |
| PV of Maturity Value (1000*0.620921323) | 620.921323 | |
| Selling Price | 924.1842645 | |
| 500 Bonds; $1000 Face Value; 8% Stated Rate; 5 Years; Semi Annual Interest Payments: | ||
| Face Value | 1000 | |
| Stated Rate | 8% | |
| Interest Payments | Semi Annual | |
| Coupon Rate | 4% | |
| Coupon Interest | 40 | |
| Maturity Period | 5 years | |
| Period | 10 | |
| Market Rate | 5% | |
| Selling Price: | ||
| PVAF (5%, 10) | 7.721734929 | |
| PV of Interest (40*7.721734929) | 308.8693972 | |
| PVIF (5%, 10) | 0.613913254 | |
| PV of Maturity Value (1000*0.613913254) | 613.913254 | |
| Selling Price | 922.7826512 | |
| 800 Bonds; $1000 Face Value; 8% Stated Rate; 10 Years; Semi Annual Interest Payments: | ||
| Face Value | 1000 | |
| Stated Rate | 8% | |
| Interest Payments | Semi Annual | |
| Coupon Rate | 4% | |
| Coupon Interest | 40 | |
| Maturity Period | 10 years | |
| Period | 20 | |
| Market Rate | 5% | |
| Selling Price: | ||
| PVAF (5%, 20) | 12.46221034 | |
| PV of Interest (40*12.46221034) | 498.4884136 | |
| PVIF (5%, 20) | 0.376889483 | |
| PV of Maturity Value (1000*0.376889483) | 376.889483 | |
| Selling Price | 875.3778966 | |
| 2000 Bonds; $500 Face Value; 12% Stated Rate; 15 Years; Semi Annual Interest Payments: | ||
| Face Value | 500 | |
| Stated Rate | 12% | |
| Interest Payments | Semi Annual | |
| Coupon Rate | 6% | |
| Coupon Interest | 30 | |
| Maturity Period | 15 years | |
| Period | 30 | |
| Market Rate | 5% | |
| Selling Price: | ||
| PVAF (5%, 30) | 15.372451 | |
| PV of Interest (30*15.372451) | 461.17353 | |
| PVIF (5%, 30) | 0.2313774 | |
| PV of Maturity Value (500*0.2313774) | 115.6887 | |
| Selling Price | 576.86223 | |
ekkarill92 answered 2 years agoRelated Solutions
Issue Price The following terms relate to independent bond issues: 460 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
460 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
460 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
820 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
1,840 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...
Issue Price The following terms relate to independent bond issues: 460 bonds; $1,000 face value; 8%...
Issue Price
The following terms
relate to independent bond issues:
460 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
460 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
890 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
1,830 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate
present value table:
PV of $1 and PV of
Annuity of $1
Required:
Assuming the...
Issue Price The following terms relate to independent bond issues: 420 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
420 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
420 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
820 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,190 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...
Issue Price The following terms relate to independent bond issues: 650 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
650 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
650 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
760 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,060 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...
Issue Price The following terms relate to independent bond issues: 640 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
640 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
640 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
810 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,110 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Required:
Assuming the market rate of interest is 10%, calculate the
selling price for each bond issue. If...
Issue Price The following terms relate to independent bond issues: 640 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
640 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
640 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
830 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
1,950 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...
Issue Price The following terms relate to independent bond issues: 420 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
420 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
420 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
820 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,190 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...
Issue Price The following terms relate to independent bond issues: 530 bonds; $1,000 face value; 8%...
Issue Price
The following terms relate to independent bond issues:
530 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
530 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
900 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,160 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...
The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8% stated rate;...
The following terms relate to independent bond issues:
500 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
500 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
800 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,000 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Required:
Assuming the market rate of interest is 10%, calculate the
selling price for each bond issue. Refer to the...
The following terms relate to independent bond issues: 430 bonds; $1,000 face value; 8% stated rate;...
The following terms relate to independent bond issues: 430
bonds; $1,000 face value; 8% stated rate; 5 years; annual interest
payments 430 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments 810 bonds; $1,000 face value; 8%
stated rate; 10 years; semiannual interest payments 2,110 bonds;
$500 face value; 12% stated rate; 15 years; semiannual interest
payments Use the appropriate present value table: PV of $1 and PV
of Annuity of $1 Required: Assuming the market rate...
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