Question

Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $80,000,000 of 10-year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of $90,406,136. Interest on the bonds is payable seminannually on Dec 31 and June 30. The fiscal year of the company is the calendar year.

5. Compute the price of $90,406,136 received for the bonds by using the table 1, table 2, table 3, table 4. Round to the nearest dollar.

Present value of the face amount:

Present value of the semiannual interest payments:

Price received for the bonds:

Answer 1

Semiannual	Interest Payment	Face Value	Pv Factor @ 9%	Present value of the face amount:	Present value of the semiannual interest payments:	Price received for the bonds:
1	4,400,000	-	0.956938	4,210,526	-	4,210,526
2	4,400,000	-	0.915730	4,029,212	-	4,029,212
3	4,400,000	-	0.876297	3,855,705	-	3,855,705
4	4,400,000	-	0.838561	3,689,670	-	3,689,670
5	4,400,000	-	0.802451	3,530,785	-	3,530,785
6	4,400,000	-	0.767896	3,378,741	-	3,378,741
7	4,400,000	-	0.734828	3,233,245	-	3,233,245
8	4,400,000	-	0.703185	3,094,015	-	3,094,015
9	4,400,000	-	0.672904	2,960,779	-	2,960,779
10	4,400,000	-	0.643928	2,833,282	-	2,833,282
11	4,400,000	-	0.616199	2,711,274	-	2,711,274
12	4,400,000	-	0.589664	2,594,521	-	2,594,521
13	4,400,000	-	0.564272	2,482,795	-	2,482,795
14	4,400,000	-	0.539973	2,375,881	-	2,375,881
15	4,400,000	-	0.516720	2,273,570	-	2,273,570
16	4,400,000	-	0.494469	2,175,665	-	2,175,665
17	4,400,000	-	0.473176	2,081,976	-	2,081,976
18	4,400,000	-	0.452800	1,992,322	-	1,992,322
19	4,400,000	-	0.433302	1,906,528	-	1,906,528
20	4,400,000	-	0.414640	1,824,418	-	1,824,418
20	-	80,000,000	0.414640	-	33,171,232	33,171,226
		Price of Bond				90,406,136