Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. determine the price of a $300,000 bond issue under

Determine the price of a $300,000 bond issue under each of the following three independent assumptions: Assumption Maturity Interest...

Free

80.2K

Verified Solution

Question

Accounting

Determine the price of a $300,000 bond issue under each of thefollowing three independent assumptions:

Assumption

Maturity

Interest Paid

Stated Interest Rate

Effective (or Market) Interest Rate

1

10 years

annually

7%

12%

2

10 years

semiannually

8%

12%

3

20 years

semiannually

10%

12%

Explain each answer.

Answer & Explanation Solved by verified expert
4.0 Ratings (534 Votes)

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Issue price of Bond:
Present Value of $300,000 PVF n=10 period, i=7%      0.4440 $       133,204
Present Value of $36, 000 PVAF n=10 period, i=7%      7.9427 $       285,937
(300000*12%)
Issue Price of Bond $       419,140
Present Value of $300,000 PVF n=20 period, i=4%      0.4564 $       136,916
Present Value of $18, 000 PVAF n=20 period, i=4%    13.5903 $       244,626
(300000*6%)
Issue Price of Bond $       381,542
Present Value of $300,000 PVF n=40 period, i=5%      0.1420 $         42,614
Present Value of $18, 000 PVAF n=40 period, i=5%    17.1591 $       308,864
(300000*6%)
Issue Price of Bond $       351,477

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

compare column, thin-layer, and gas chromatography in terms of mobile phase and stationary phase

Medical Sciences
1.2K views

Describe how all tissues are comprised of living cells and extracellular matrix

Civil Engineering
1.2K views

: A wet soil sample with a water content of 15% and percentage air voids of...

Biology
1.2K views

Determine the period AAA 4 6 8 10 12 14 4 2 2 4 2...

Physics
1.2K views

A square wire of side 1 cm is placed perpendicular 9 to the principal axis...

Physics
1.2K views

A disc of mass m and radius R is rotating with angular velocity wo and...

Accounting
1.2K views

x Company prepares monthly financial statements. The following transactions...

Accounting
1.2K views

Only D part solution per...

Accounting
1.2K views

Statement of Cash Flows: Depreciation and amortization are added to net income in the Operating...

Accounting
1.2K views

Fit & Slim (F&S) is a health club that offers members various gym services. Required:...

Accounting
1.2K views

Why is the budget a far more important document for both governments and not-for-profits than...

Finance
1.2K views

An investor buys a property for $635,000 with a 25-year mortgage and monthly payments at...