Check my work Exercise 14-2 Determine the price of bonds in various situations [

Question

Check my work Exercise 14-2 Determine the price of bonds in various situations [LO14-2] Complete the below table to calculate the price of a $1.8 million bond issue under each of the following independent assumptions (FV of S1 PV of $1, FVA of $1, PVA of $1, EVAD of $1 and PVAD of S) (Use appropriate factor(s) from the tables provided.) 1. Maturity 17 years, interest paid annually, stated rate 10%, effective (market) rate 12% 2 Maturity 15 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 9 years, interest paid semiannually, stated rate 12%, effective (market) rate 10% 5. Maturity 9 years, interest paid semiannually, stated rate 12%, effective (market) rate 12% Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Maturity 15 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.) Table values are based on: 30 6.0% Flow Present Value Cash Interest Principal S1,800,000 Price of bonds ? Required! Required 3

Explanation / Answer

ANS

REQUIRED 1

N = 17

I = 12%

CASH FLOW AMOUNT PRESENT VALUE

INTEREST $180000 $1281533

PRINCIPLE $1800000 $262159

PRICE OF BONDS $1543692   

REQUIRED 2

N = 30

I = 6%

CASH FLOW AMOUNT PRESENT VALUE

INTEREST $90000 $1238834

PRINCIPLE $1800000 $313398

PRICE OF BONDS $1552232

REQUIRED 3

N = 12

I = 5%

CASH FLOW AMOUNT PRESENT VALUE

INTEREST $216000 $1914462

PRINCIPLE $1800000 $1002307

PRICE OF BONDS $2916769

REQUIRED 4

N = 18

I = 5%

CASH FLOW AMOUNT PRESENT VALUE

INTEREST $216000 $2524950

PRINCIPLE $1800000 $747937

PRICE OF BONDS $3272887

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