Question

Complete the below table to calculate the price of a $1.9 million bond issue under each of the following independent assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):

1. Maturity 12 years, interest paid annually, stated rate 10%, effective (market) rate 12%

2. Maturity 9 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%

3. Maturity 6 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%

4. Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%

5. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%

Maturity 12 years, interest paid annually, stated rate 10%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.)

	Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bonds

Answer 1

1)	Table values are based on:
	n =	12
	i =	12
	Cash Flow	Amount	Present Value
	Interest	190000	1176930
	Principal	1900000	487683
	Price of bonds		1664613
2)	Table values are based on:
	n =	18
	i =	6
	Cash Flow	Amount	Present Value
	Interest	95000	1028622
	Principal	1900000	665653
	Price of bonds		1694275
3)	Table values are based on:
	n =	12
	i =	5
	Cash Flow	Amount	Present Value
	Interest	114000	1010411
	Principal	1900000	1057991
	Price of bonds		2068402
4)	Table values are based on:
	n =	40
	i =	5
	Cash Flow	Amount	Present Value
	Interest	114000	1956136
	Principal	1900000	269887
	Price of bonds		2226023
5)	Table values are based on:
	n =	20
	i =	6
	Cash Flow	Amount	Present Value
	Interest	114000	1307571
	Principal	1900000	592429
	Price of bonds		1900000
6)	Table values are based on:
	n =	12
	i =	12
	Cash Flow	Amount	Present Value
	Interest	190000	1176930
	Principal	1900000	487683
	Price of bonds		1664613