1. Bakels Company issued a $100,000, 20 year bond with a stated interest rate of

Question

1. Bakels Company issued a $100,000, 20 year bond with a stated interest rate of 6%. Assume interest payments are made annually. What is the selling price of the bond if the market rate of interest is 9%? (Round to the nearest dollar.)

2. Askers Company issued a $100,000, 20 year bond with a stated interest rate of 6%. Assume interest payments are made annually. If the market rate of interest is 8%, the bond will sell at

3. Heww Inc., issued a $50,000, 10 year bond with a stated interest rate of 6%. Assume interest payments are made semi-annually. What is the selling price of the bond if the market rate of interest is 5%? (Round to the nearest dollar.)

4. Voguard Company issued a $50,000, 10 year bond with a stated interest rate of 6%. Assume interest payments are made semi-annually. If the market rate of interest is 5%, the bond will sell at

Explanation / Answer

Bakels Company issued a $100,000, 20 year bond with a stated interest rate of 6%. Assume interest payments are made annually. What is the selling price of the bond if the market rate of interest is 9%? (Round to the nearest dollar.) Selling price = {C[1 - (1+i)-N]/i} + M[1+i]-N

6000[0.822/0.09] + 17843.1 = 72643.1 ANSWER 2. Askers Company issued a $100,000, 20 year bond with a stated interest rate of 6%. Assume interest payments are made annually. If the market rate of interest is 8%, the bond will sell at market price less thans face value, so the bonds will sell at a discount

P = 6000 X [{1-(1+0.08)-20}/0.08] + 6000[1+0.08]-20= = 60207.3 market price ANSWER

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.