5) Red Panda Inc. issues $750,000 of bonds paying a stated interest rate of 10%. The bonds are due in 10 years, with interest payable annually each year on Jan. 1st. When the bonds are issued, other bonds of similar risk and maturity are paying 12% (i.e. the discount rate or market interest rate is 12%). Calculate the issuance (selling) price of this bond: Present value of interest payments (annuity portion) Present Value of Bond Principal (single sum value) (int. payment) * _(factor)__ = 750,000 (principal) * _(factor)__= Total Present Value, or selling price Is the bond issued at a premium, discount, or face value (par)?
5) Red Panda Inc. issues $750,000 of bonds paying a stated interest rate of 10%. The bonds are due in 10 years, with interest payable annually each year on Jan. 1st. When the bonds are issued, other bonds of similar risk and maturity are paying 12% (i.e. the discount rate or market interest rate is 12%). Calculate the issuance (selling) price of this bond: Present value of interest payments (annuity portion) Present Value of Bond Principal (single sum value) (int. payment) * _(factor)__ = 750,000 (principal) * _(factor)__= Total Present Value, or selling price Is the bond issued at a premium, discount, or face value (par)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please explain proper steps by Step and Do Not Give Solution In Image Format ? And Fast Answering Please ?
Transcribed Image Text:5) Red Panda Inc. issues $750,000 of bonds paying a stated interest rate of 10%. The bonds
are due in 10 years, with interest payable annually each year on Jan. 1st. When the bonds
are issued, other bonds of similar risk and maturity are paying 12% (i.e. the discount rate
or market interest rate is 12%).
Calculate the issuance (selling) price of this bond:
Present value of interest
payments (annuity portion)
Present Value of Bond
Principal (single sum value)
(int. payment) *
_(factor)__ =
750,000 (principal) *
_(factor)__=
Total Present Value, or selling
price
Is the bond issued at a premium, discount, or face value (par)?
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