**ABC Company Bond Issuance Calculation****Scenario:**ABC Company will issue $5,100,000 in 8%, 10-year bonds when the market rate of interest is 10%. Interest is paid semiannually.**Required:**Determine how much cash ABC Company will realize from the bond issue.**Instructions:**- Use tables, Excel, or a financial calculator to find the solution.- Round your intermediate calculations to the nearest whole dollar.- Click on the following links to access the necessary tables: [FV of $1](#) [PV of $1](#) [PVA of $1](#) [FVAD of $1](#) [PVAD of $1](#)**Calculation Input:**- Bond issue price: (Input box for calculation)**Notes:**- Ensure all calculations are accurate and rounded appropriately.- Consider the impact of the semiannual interest payment on calculations.**Understanding Bond Pricing:**- The bond issuance involves understanding present value calculations of both the principal (lump sum) and the annuity (interest payments). Since interest is paid semiannually, adjust the rate and periods accordingly.- The key takeaway is determining how changes in market interest rates affect the bond's present value, and thus the cash realization for the issuer.

One of the sources of raising funds by business entities is issue of debt securities i.e. Bonds, Debentures, etc. The business entities are required to pay a fixed rate of interest in the form of return to all the people holding the debt securities. Interest is required to be paid even if the business entity doesn't earn any profit.The value of the bond is the present value of the future cash flow of the bond.Answer: $4,464,430 should be realized in cash from the bond issue.

Business

Accounting

Required: Determine how much cash ABC Company will realize from the bond issue. Note: Use tables, Excel, or a financial calculator. Round your intermediate calculations to the nearest whole dollar. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Required: Determine how much cash ABC Company will realize from the bond issue. Note: Use tables, Excel, or a financial calculator. Round your intermediate calculations to the nearest whole dollar. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

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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