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QUESTION 38   ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 10% and market interest rate of 12%.  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 %   /  n Present Value of $1 Present Value of ordinary annuity of $1 10%/10          .38554            6.14457 12%/10          .32197            5.65022   5%/20          .37689          12.46221   6%/20          .31180          11.46992       $286,748     $155,900     $442,648     $467,455.25

QUESTION 38   ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 10% and market interest rate of 12%.  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 %   /  n Present Value of $1 Present Value of ordinary annuity of $1 10%/10          .38554            6.14457 12%/10          .32197            5.65022   5%/20          .37689          12.46221   6%/20          .31180          11.46992       $286,748     $155,900     $442,648     $467,455.25

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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QUESTION 38

  1.  

    ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 10% and market interest rate of 12%.  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

    %   /  n

    Present Value of $1

    Present Value of ordinary annuity of $1

    10%/10

             .38554

               6.14457

    12%/10

             .32197

               5.65022

      5%/20

             .37689

             12.46221

      6%/20

             .31180

             11.46992

     

       

    $286,748
       

    $155,900
       

    $442,648
       

    $467,455.25

     

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