0oyChapter 10-Connect à chapter 10 . Connect 0 March Madness®-XFINIT.. × x jar K
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0oyChapter 10-Connect à chapter 10 . Connect 0 March Madness®-XFINIT.. × x jar KC ezto.mheducation.com/hm.tpx E connect Acct 1201 Spring 2018: Acct 1201 Spring 2018 ACCOUNTING Chapter 10 Connect instructions I help Question 3 (of 15) Save& Exit Submit Time remaining: 14939 6.66 points LaTanya Corporation is planning to issue bonds with a face value of $101,500 and a coupon rate of 8 percent. The bonds mature in seven years. I this year. (FV of $1, PV of S1, FVA of $1, Round your final answer to whole dollars.) Interest is paid annually on December 31. All of the bonds will be sold on January 1 of and PVA of $1) (Use the appropriate factor(s) from the tables provided Required: Compute the issue (sale) price on January 1 of this year for each of the following independent cases: a. Case A: Market interest rate (annual): 8 percent. b. Case B: Market interest rate (annual): 6 percent c. Case C: Market interest rate (annual): 9 percent 2Explanation / Answer
a.Issue Price= 101500
b.Issue Price= 112832
Workings:
Annual Interest paid = 101500*0.08 = 8120
c. Issue Price=96392
Workings:
Year Cash Outflow[A] PVAF @6%
[B] Present Value of outflow
[A*B] 1 8120 0.9434 7660.3774 2 8120 0.8900 7226.7711 3 8120 0.8396 6817.7086 4 8120 0.7921 6431.8005 5 8120 0.7473 6067.7364 6 8120 0.7050 5724.2796 7 8120 0.6651 5400.2638 7 101500 0.6651 67503.2970 Total 112832.2343
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