The face value of a bond is $78,000, its stated rate is 7%, and the term of the bond is five years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. Determine the present value of the bonds at issuance Present value of $1 4% 5% 7% 8% 6% 0.747 0.713 0681 5 0822 0.784 6 0.790 0.746 0.705 0.666 0.630 7 0.760 0.711 0665 0.623 0.583 8 0.731 0.677 0627 0.582 0.540 9 0.703 0645 0.592 0.544 0.500 10 0.676 0.614 0.558 0.508 0.463 Present value of ordinary annuity of $1 5% 6% 7% 6 5242 5076 5 4452 4.329 4212 4.100 3.993 4.917 4.767 4.623 7 6.002 5.786 5.582 5.389 5.206 6.733 6.463 6210 5971 5.747 9 7.435 7.108 6.802 6.515 6.247 10 8.111 7.722 7.360 7.024 6710 8 OA $55,857 OB. $22,143 OC. 574,871 OD. $78,000
The face value of a bond is $78,000, its stated rate is 7%, and the term of the bond is five years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. Determine the present value of the bonds at issuance Present value of $1 4% 5% 7% 8% 6% 0.747 0.713 0681 5 0822 0.784 6 0.790 0.746 0.705 0.666 0.630 7 0.760 0.711 0665 0.623 0.583 8 0.731 0.677 0627 0.582 0.540 9 0.703 0645 0.592 0.544 0.500 10 0.676 0.614 0.558 0.508 0.463 Present value of ordinary annuity of $1 5% 6% 7% 6 5242 5076 5 4452 4.329 4212 4.100 3.993 4.917 4.767 4.623 7 6.002 5.786 5.582 5.389 5.206 6.733 6.463 6210 5971 5.747 9 7.435 7.108 6.802 6.515 6.247 10 8.111 7.722 7.360 7.024 6710 8 OA $55,857 OB. $22,143 OC. 574,871 OD. $78,000
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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Dd.53.
Transcribed Image Text:QUESTION 29
The face value of a bond is $78,000, its stated rate is 7%, and the term of the bond is five years. The bond pays interest semiannually. At the time of issue, the
market rate is 8%. Determine the present value
of the bonds at issuance.
Present value of $1:
4%
5% 6%
5 0.822 0.784 0.747
6 0.790 0.746 0.705 0.666 0.630
7 0.760 0.711 0665 0.623 0.583
0.731 0.677 0.627 0.582 0.540
8
9 0.703 0645 0.592 0.544 0.500
10 0.676 0.614 0.558 0.508 0.463
Present value of ordinary annuity of $1
4% 5% 6% 7%
5 4452 4.329 4.212 4.100
8%
3.993
6 5.242 5.076 4.917 4.767 4.623
7 6.002 5.786 5.582 5.389 5.206
8 6.733 6.463 6.210 5.971 5.747
7% 8%
0.713 0.681
9 7.435 7.108 6.802 6.515 6.247
10 8.111 7.722 7.360 7.024 6.710
OA. $55,857
OB. $22,143
OC 574,871
OD. $78,000
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