A $3,500,000 issue of a 30-year bond, redeemable at par, offers 9.00% coupons payable semi-annually. The bond yields 5.50% compounded monthly. a. What was the purchase price of the bond, if it was purchased 15 years before maturity?

A $3,500,000 issue of a 30-year bond, redeemable at par, offers 9.00% coupons payable semi-annually. The bond yields 5.50% compounded monthly. a. What was the purchase price of the bond, if it was purchased 15 years before maturity?

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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Question

A $3,500,000 issue of a 30-year bond, redeemable at par, offers 9.00% coupons
payable semi-annually. The bond yields 5.50% compounded monthly.
a. What was the purchase price of the bond, if it was purchased 15 years before
maturity?
Round to the nearest cent
b. What was the amount of discount or premium on the bond?
amount is

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