Citywide Company issues bonds with a par value of $150,000 on their stated issue

Question

Citywide Company issues bonds with a par value of $150,000 on their stated issue date. The bonds mature in five years and pay 10% annual interest in semiannual payments. On the issue date, the annual market ezies ies % Table B.1, Table B.2, Table B.3, 33rtti Table B.41 (Use appropriate factor( from the tables provided.) 1. What is the amount of each semiannual interest payment for these bonds? Semiannual Rate Semiannual cash interest payment Par (maturity) value 50,000 x 59 -S 7,500 2. How many semiannual interest payments will be made on these bonds over their life? Number of payments 10

Explanation / Answer

Since, Parts 1 to 3 have been answered, Part 4 has been answered as below:

Notes:

1) PVIF is the Present Value Interest Factor.

2) PVIFA is the Present Value Interest Factor for An Annuity.

Total Values Based On: n= 10 i= 4.00% Cash Flow Table Value Amount Present Value Par (Maturity) Value 150,000 0.6756 (from PVIF Table) X 101,340 Interest (Annuity) 7,500 8.1109 from PVIFA Table) X 60,832 Price of Bonds $162,172

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---