Haden Railroad Co. is about to issue 5800,000 of 10-ycar bonds paying a9% intere

Q: Haden Railroad Co. is about to issue 5800,000 of 10-ycar bonds paying a9% intere

Principal 800,000 * .37689 $301,512 ( where I = 5% and t = 20 years ,PV of $1 table) Interest 800,000 @4.5% = $36,000 36,000 * 12.46221 448,640 (where I = 5% , t = 20 years , PV of ordinary annuity table) Face value $750,152 Principal 800,000 * .37689 $301,512 ( where I = 5% and t = 20 years ,PV of $1 table) Interest 800,000 @4.5% = $36,000 36,000 * 12.46221 448,640 (where I = 5% , t = 20 years , PV of ordinary annuity table) Face value $750,152

ID: 2462048 • Letter: H

Question

Haden Railroad Co. is about to issue 5800,000 of 10-ycar bonds paying a9% interest rate, with interest payable semi-annually. The discount rate for such securities is 10%. How much can Haden expect to receive for the sale of these bonds? (show all work) Morten Corporation purchased $320,000 of its bonds on June 30,2012, and immediately retired them. The carrying value of the bonds on the rate was $287,400. The bonds pay annual interest and the interest payment on June 30, 2012, has been made and recorded. McEvoy, Inc., purchased $550,000 of its bonds at 96 on June 30, 2012 immediately retired them. The earning value of the bonds on the ret was $535,000. The bonds pay annual interest and the interest payment

Explanation / Answer

Principal

800,000 * .37689 $301,512

( where I = 5% and t = 20 years ,PV of $1 table)

Interest

800,000 @4.5% = $36,000

36,000 * 12.46221 448,640

(where I = 5% , t = 20 years , PV of ordinary annuity table)

Face value $750,152