If you could show work so that I can learn what mistakes I am making :) thank yo
ID: 2552957 • Letter: I
Question
If you could show work so that I can learn what mistakes I am making :) thank you!
Garcia Company issues 10.00%, 15-year bonds with a par value of $370,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8.00%, which implies a selling price of 117 1/4 Confirm that the bonds' selling price is approximately correct. Use the present value tables B.1 and B.3 in Per Value x Price Selling Price 370,000 117 433,825 Cash Flow $370,000 par (maturity) value $18,500 interest payment Price of Bond Difference due to rounding of table values Table Value Present Value $ 433,825Explanation / Answer
where i= 4% n= 30 par value price = Selling price 370,000 117 1/4 = 433825 Cash flow Table vale PV $370,000 par (maturity)value 0.30832 114078 $18,500 interest payment 17.29203 319903 price of bond 433981 Difference due to rounding of table values 156 (note the table value used is upto 5 decimal point , if in ques schedule it is provided for less use that one) For par value use PV of $1 table at 4% for 30 years for interest use PV of ordinary annuity table at 4% for 30 years