D Chapter 10 - Connect x March Madness -XFINITY S x C ?Not Secure ezto.mheducati

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D Chapter 10 - Connect x March Madness -XFINITY S x C ?Not Secure ezto.mheducation.com/hm.tpx Question 3 (of 15) Save& Exit Submit Time remaining: 0:1914 value: 6.66 points La Tanya 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. Interest is paid annually on December 31. All of the bonds will be sold on January 1 df Round your final answer to whole dollars.) 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. Rouynely ur final answer to whole dolandt5)( the appropriate factorte) from the tabl 8,120 b. Case B: Market interest rate (annual): 6 percent. c. Case C: Market interest rate (annual): 9 percent. Hints References eBook& Resources 2

Explanation / Answer

a. Market interest rate=8% Coupon rate=8% Both are same Hence,Issue price=Face value=$101500 b. Market interest rate=6% Year Cashflow Dicount Factor@ 9% Discounted cashflow 1 to 7 8120 5.582 45325.84 (101500*8%) 7 101500 0.665 67497.5 Issue price 112823.34 c. Market interest rate=9% Year Cashflow Dicount Factor@ 9% Discounted cashflow 1 to 7 8120 5.033 40867.96 (101500*8%) 7 101500 0.547 55520.5 Issue price 96388.46

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