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The purpose of this calculation question is for you to compute the fair value of...

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Accounting

The purpose of this calculation question is for you to compute the fair value of the financial liabilities of XYZ Company.

XYZ Company has only 1 financial liability. It is a non-callable publicly traded bond. Here are your facts to input into this question:

  • Maturity value of the bond = $280,000,000
  • Coupon Rate for the bond is 4.80% paid semi-annually.
  • Bond matures on the last day of the firms financial year.
  • Last Financial Year end the yield to maturity was 4.38% based on doubling the periodic yield.
  • Last Financial Year end bond had exactly 18 years to maturity
  • This Year Financial Year end the yield to maturity demanded by the market is 5.68% (based on doubling the periodic rate)

Required: Compute the fair value of the bond to be reported on this years balance sheet. Round to the nearest dollar and do NOT include the dollar sign in your response.

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