Pharoah Company is about to issue $271,500 of 7-year bonds paying an 12% interes
ID: 2513967 • Letter: P
Question
Pharoah Company is about to issue $271,500 of 7-year bonds paying an 12% interest rate, with interest payable semiannually. The discount rate for such securities is 8%.
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
How much can Pharoah expect to receive for the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,575.)
Crane Company is about to issue $250,900 of 10-year bonds paying an 9% interest rate, with interest payable semiannually. The discount rate for such securities is 12%.
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
In this case, how much can Crane expect to receive from the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,575.)
Crane can expect to receive
Pharoah can expect to receive $Explanation / Answer
1 Amount PV factor Present value of cash flows Semi-annual interest 16290 10.56312 172073 Principal 271500 0.57748 156786 Total 328859 Pharoah can expect to receive =$328859 2 Amount PV factor Present value of cash flows Semi-annual interest 11290.5 11.46992 129501 Principal 250900 0.3118 78231 Total 207732 Crane can expect to receive $207732
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