Bond Discount, Entries for Bonds Payable Transactions On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $8,100,000 of 9-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $7,644,536. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 5. Compute the price of $7,644,536 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds
Bond Discount, Entries for Bonds Payable Transactions On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $8,100,000 of 9-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $7,644,536. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 5. Compute the price of $7,644,536 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds
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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Bond Discount, Entries for Bonds Payable Transactions
On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $8,100,000 of 9-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $7,644,536. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
5. Compute the price of $7,644,536 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.
| Present value of the semiannual interest payments | |
| Price received for the bonds |
Transcribed Image Text:5. Compute the price of $7,644,536 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. (Round to the nearest dollar.) Your total may vary slightly from the price given due to roundir
differences.
Present value of the face amount
$4
3,089,907
Present value of the semiannual interest payments
3,122,801.1 x
Price received for the bonds
$ 7,644,565.35 x
Transcribed Image Text:Present Value of Ordinary Annuity of $1 per Period
Periods
8%
9%
10%
11%
12%
13%
14%
1
0.92593
0.91743
0.90909
0.90090
0.89286
0.88496
0.87719
1.78326
1.75911
1.73554
1.71252
1.69005
1.66810
1.64666
3
2.57710
2.53129
248685
2.44371
240183
2.36115
232163
4
3.31213
3.23972
3.16987
3.10245
3.03735
2.97447
2.91371
3.99271
3.88965
3.79079
3.69590
3.60478
3.51723
3.43308
4.62288
4.48592
4.35526
4.23054
4.11141
3.99755
3.88867
520637
5.03295
4.86842
4.71220
4.56376
4.42261
4.28830
5.74664
5.53482
5.33493
5.14612
4.96764
4.79677
4.63886
6.24689
5.99525
5.75902
553705
5.32825
5.13166
4.94637
10
6.71008
6.41766
6.14457
588923
5.65022
5.42624
5.21612
11
7.13896
6.80519
6.49506
620652
5.93770
5.68694
5.45273
12
7.53608
7.16073
6.81369
6.49236
6.19437
5.91765
5.66029
13
7.90378
7.48690
7.10336
6.74987
6.42355
6.12181
5.84236
14
822424
7.78615
7.36669
6.96187
6.62817
630249
6.00207
15
8.55948
8.06069
7.60608
7.19087
6.81086
6.46238
6.14217
16
885137
8.31256
7.82371
737916
6.97399
6.60388
6.26506
17
9.12164
8.54363
8.02155
7.54879
7.11963
6.72909
6.37286
18
937189
8.75563
8.20141
7.70162
7.24967
6.83991
6.46742
19
9.60360
8.95011
8.36492
783929
7.36578
693797
6.55037
20
9.81815
9.12855
8.51356
7.96333
7.46944
7.02475
6.62313
21
10.01680
9.29224
8.64869
8.07507
7.56200
7.10155
6.68696
22
10.20074
9.44243
8.77154
8.17574
7.64465
7.16951
6.74294
23
10.37106
9.58021
8.88322
8.26643
7.71843
7.22966
6.79206
24
1052876
9.70661
8.98474
834814
7.78432
728288
6.835 14
25
10.67478
9.82258
9.07704
8.42174
7.84314
7.32998
6.87293
26
10.80998
9.92897
9.16095
8.48806
7.89566
7.37167
6.90608
27
10.93516
10.02658
9.23722
8.54780
7.94255
7.40856
6.93515
28
11.05108
10.11613
9.30657
8.60162
7.98442
7.44120
6.96066
29
11.15841
10.19828
9.36961
8.65011
8.02181
7.47009
6.98304
30
11.25778
10.27365
9.42691
8.69379
8.05518
7.49565
7.00266
31
11.34980
10.34280
9.47901
8.73315
8.08499
7.51828
7.01988
32
11.43500
10.40624
9.52638
8.76860
8.11159
753830
7.03498
33
11.51389
10.46444
9.56943
8.80054
8.13535
755602
7.04823
34
11.58693
10.51784
9.60857
8.82932
8.15656
7.57170
7.05985
35
11.65457
10.56682
9.64416
8.85524
8.17550
7.58557
7.07005
40
11.92461
10.75736
9.77905
8.951 05
8.24378
7.63438
7.10504
45
1210840
10.88120
9.86 281
9.00791
8.28252
7.66086
7.12322
50
12.23348
10.96168
9.91481
9.04165
830450
7.67524
7.13266
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