On January 1, 2014, Giamartino, Inc. issues a
4-year bond with a face value of $100,000....
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Accounting
On January 1, 2014, Giamartino, Inc. issues a4-year bond with a face value of $100,000. Thesemi-annual interest payments of $6,000 are due July 1 and January1 of each year.
Coupon Rate (or Stated Rate)
12%
Market Interest Rate at Issuance
10%
Discount Rate
No. of Periods/No. of Payments
Time Value Factor
Present Value of $1 Lump Sum
Time Value Factor
Present Value of
Ordinary Annuity
12%
4
0.6355
3.0373
10%
4
0.6830
3.1699
6%
8
0.6274
6.2098
5%
8
0.6768
6.4632
What is the present value of the bond on the date ofissuance?
Answer & Explanation
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4.4 Ratings (692 Votes)
Concepts Bonds issue price or Present Value is calculated by ADDING the Discounted face value of bonds payable at applicable market rate of interest Face
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