Please complete the above table for the 5 requirements. 9 Complete the below tab
ID: 2335415 • Letter: P
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Please complete the above table for the 5 requirements.
9 Complete the below table to calculate the price of a $1.6 million bond issue under each of the following independent assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use approprlate factor(s) from the tables provided.) 1. Maturity 16 years, interest paid annually, stated rate 10%, effective (market) rate 12% 2. Maturity 15 years, interest paid semiannually, stated rate 10%, effective (market) rate 12% 3. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10% 4. Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 10% 5. Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 12% 5.55 points eBook Complete this question by entering your answers in the tabs below Hint Required Required 2 Required 3Required 4 Required 5 Print Maturity 16 years, interest paid annually, stated rate 10%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.) References Table values are based on: Cash Flow Interest Principal Amount Present Value Price of bonds Required 2>Explanation / Answer
1. Present value of bond price (present value) = face value / (1+ market interest)number of payments + interest [(1- (1+market interest)-number of payments] /market interest
= $1600000 /(1+0.12)16 + (1600000*10%) [(1- (1+0.12)-16] /0.12
= $1600000 /(1.12)16 + 160000[(1- (1.12)-16] /0.12
= $1600000 /(1.12)16 + 160000[(1- 1/(1.12)16] /0.12
= $1600000 /6.13039 + 160000[(1- 1/6.13039] /0.12
= 260994.81 + 1115837.65
= $1376832.46
2. Present value of bond price (present value) = face value / (1+ market interest)number of payments + interest [(1- (1+market interest)-number of payments] /market interest
= $1600000 /(1+0.06)15*2 + (1600000*5%) [(1- (1+0.06)-15*2] /0.06
= $1600000 /(1.06)30 + 80000 [(1- (1.06)-30] /0.06
= $1600000 /(1.06)30 + 80000 [(1- 1/(1.06)30] /0.06
= $1600000 /5.74349 + 80000 [(1- 1/5.74349] /0.06
= 278576.27 + 1101186.44
= 1379762.71
3. Present value of bond price (present value) = face value / (1+ market interest)number of payments + interest [(1- (1+market interest)-number of payments] /market interest
= $1600000 /(1+0.05)10*2 + (1600000*6%) [(1- (1+0.05)-10*2] /0.05
= $1600000 /(1.05)20 + 96000[(1- (1.05)-20] /0.05
= $1600000 /(1.05)20 + 96000[(1- 1/(1.05)20] /0.05
= $1600000 /2.65330 + 96000[(1- 1/2.65330] /0.05
= 603022.65 + 1196372.82
= $1799395.47
4. Present value of bond price (present value) = face value / (1+ market interest)number of payments + interest [(1- (1+market interest)-number of payments] /market interest
= $1600000 /(1+0.05)20*2 + (1600000*6%) [(1- (1+0.05)-20*2] /0.05
= $1600000 /(1.05)40 + 96000 [(1- (1.05)-40] /0.05
= $1600000 /(1.05)40 + 96000 [(1- 1/ (1.05)40] /0.05
= $1600000 /7.03999 + 96000 [(1- 1/ 7.03999] /0.05
= 227273.05 + 1647272.34.
= 1874545.39
5. Present value of bond price (present value) = face value / (1+ market interest)number of payments + interest [(1- (1+market interest)-number of payments] /market interest
= $1600000 /(1+0.06)20*2 + (1600000*6%) [(1- (1+0.06)-20*2] /0.06
= $1600000 /(1.06)40 + 96000 [(1- (1.06)-40] /0.06
= $1600000 /(1.06)40 + 96000 [(1- 1/(1.06)40] /0.06
= $1600000 /10.28572 + 96000 [(1- 1/10.28572] /0.06
= 155555.47 + 1444444.53
= $1600000
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