What would you pay for a $210,000 debenture bond that matures in 15 years and pays $10,500 a year in interest if you wanted toearn a yield of:Click here to view factor tables.(a)3%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answes to O decimal places, e.g. 458,581.)Amount to pay$

Answered: (a) 3%? (Round factor values to 5…

(a) 3%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Amount to pay

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

What would you pay for a $210,000 debenture bond that matures in 15 years and pays $10,500 a year in interest if you wanted to
earn a yield of:
Click here to view factor tables.
(a)
3%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answes to O decimal places, e.g. 458,581.)
Amount to pay
$

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