On January 1, 2020, A Company issues $600,000, 12-year, 12%, semi-annual bonds. On the issue date,...

On January 1, 2020, A Company issues $600,000, 12-year, 12%, semi-annual bonds. On the issue date, the market rate is 14%.

Determine the amount of cash received from the Issuance of the Bond. (4 Steps Must Show)

Solutions

Expert Solution

Issue Price of Bonds	$ 6,00,000.00
Maturity Year=(12*2)	24
coupon Rate=(12%/2)	6%
Effective Rate=(14%/2)	7%
	(A)	(B)	(A)*(B)
Cash Flow	P.V Factor(24 years @ 7%)	Amount	Present Value
Maturity Price of Bonds	0.197147	$ 6,00,000.00	$ 1,18,288
Interest	11.469334	$ 36,000.00	$ 4,12,896
Bonds Value			$ 5,31,184


Interest=($600000*6%)=	$ 36,000.00

ekkarill92 answered 1 year ago

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