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ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%.  They will mature in 10 years.  Interest will be paid semiannually.  At the date of issuance, compute the present value (bond issue price) of the future cash flows.

ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%.  They will mature in 10 years.  Interest will be paid semiannually.  At the date of issuance, compute the present value (bond issue price) of the future cash flows.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%.  They will mature in 10 years.  Interest will be paid semiannually.  At the date of issuance, compute the present value (bond issue price) of the future cash flows.  Following are appropriate factors from tables:

ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%. They will mature in 10 years. Interest will be paid semiannually. At the date of issuance, compute the present value (bond issue price) of the future cash flows. Following are appropriate factors from tables: Table Present Value of $1 Present Value of % n 38554 .32197 .37689 .31180 10%/10 12%/10 5%/20 6%/20 Required Computation: ordinary annuity of $1 6.14457 5.65022 12.46221 11.46992
Transcribed Image Text:ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%. They will mature in 10 years. Interest will be paid semiannually. At the date of issuance, compute the present value (bond issue price) of the future cash flows. Following are appropriate factors from tables: Table Present Value of $1 Present Value of % n 38554 .32197 .37689 .31180 10%/10 12%/10 5%/20 6%/20 Required Computation: ordinary annuity of $1 6.14457 5.65022 12.46221 11.46992
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