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
Problem 1PS
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Exercise 5-21 (Algo) Price of a bond [LO5-9, 5-10]
On September 30, 2024, the Techno Corporation issued 8% stated rate bonds with a
fac amount of $140 million. The bonds mature on September 30, 2044 (20 years).
The market rate of interest for similar bonds was 10%. Interest is paid semiannually on
March 31 and September 30.
Required:
Determine the price of the bonds on September 30, 2024.
Note: Use tables, Excel, or a financial calculator. Round your final answers to
nearest whole dollar amount, not in millions. (FV of $1. PV of $1. FVA of $1. PVA of $1.
VAD of $1 and PVAD of $1)
Time values are based on:
no
Cash Flow
Interest
Principal
j=
Price of bonds
$
$
Amount
40
5%
11,200,000
140,000,000
Present Value
19,887,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb10bbe32-e34d-4fff-bcf6-22e8a002489e%2Fe9dbcef2-2173-4b4e-8c51-02474a64101a%2Fzfjo1g5_processed.jpeg&w=3840&q=75)
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eBook
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References
Exercise 5-21 (Algo) Price of a bond [LO5-9, 5-10]
On September 30, 2024, the Techno Corporation issued 8% stated rate bonds with a
fac amount of $140 million. The bonds mature on September 30, 2044 (20 years).
The market rate of interest for similar bonds was 10%. Interest is paid semiannually on
March 31 and September 30.
Required:
Determine the price of the bonds on September 30, 2024.
Note: Use tables, Excel, or a financial calculator. Round your final answers to
nearest whole dollar amount, not in millions. (FV of $1. PV of $1. FVA of $1. PVA of $1.
VAD of $1 and PVAD of $1)
Time values are based on:
no
Cash Flow
Interest
Principal
j=
Price of bonds
$
$
Amount
40
5%
11,200,000
140,000,000
Present Value
19,887,000
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