Question

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 of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar. Situation Selling Price of the Bond Issue a. $ 591,360 b. $ 590,720 c. $ 708,750 d. $ 577

Answer 1

Bond 1
Table values are based on:
Face Amount	$                                               430,000
Interest Payment	$                                                 34,400
Market Interest rate per period	10.00%
Cash Flow	Table Value(PV of 10% for 5 period)	Amount	Present Value
PV of Interest	3.79079	$                                         34,400	$130,403
PV of Principal	0.62092	$                                       430,000	$266,996
PV of Bonds Payable(Issue Price)			$397,399
Bond 2
Table values are based on:
Face Amount	$                                               810,000
Interest Payment	$                                                 32,400
Market Interest rate per period	5.00%
Cash Flow	Table Value(PV of 5% for 20 period)	Amount	Present Value
PV of Interest	12.46221	$                                         32,400	$403,776
PV of Principal	0.37689	$                                       810,000	$305,281
PV of Bonds Payable(Issue Price)			$709,057
Bond 3
Table values are based on:
Face Amount	$                                            1,055,000
Interest Payment	$                                                 63,300
Market Interest rate per period	5.00%
Cash Flow	Table Value(PV of 5% for 30 period)	Amount	Present Value
PV of Interest	15.37245	$                                         63,300	$973,076
PV of Principal	0.23138	$                                    1,055,000	$244,106
PV of Bonds Payable(Issue Price)			$1,217,182