RSM221 Ch. 14 Pr. Qs #8

< Chapter 14 Questions Question 8 of 10 < > 1/1 = Hamilton Company issues $10,000,000, 6%, 5-year bonds dated January 1, 2023 on January 1, 2023. The bonds pay interest semi- annually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue? 2.5% 3.0% 5.0% 6.0% Present value of a single sum for 5 periods .88385 86261 .78353 74726 Present value of a single sum for 10 periods .78120 74409 61391 .55839 Present value of an annuity for 5 periods 464583 457971 432948 421236 Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009 $10,434,616 $10,432,988 $10,000,000 $10.,437.618 eTextbook and Media Solution Interest is paid semi-annually, therefore 2.5% and 10 periods is used to determine the present value of the bond. PV of principal ($10,000,000 x.78120) + PV of payments ($300,000 x 8.75206) = $10,437,618.