https//edugen. wileyplu Multiple Choice Question 112 On January 2, 2017, waterwa

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https//edugen. wileyplu Multiple Choice Question 112 On January 2, 2017, waterway Industries wishes to issue $7500000 par value of its 8%, 10-year bonds. The bonds pay interest annually on lanuary 1. The curent yield rate on such bonds is 1 1%. Using the interest factors below, compute the amount that waterway wil realize from the sale (issuance) of the bonds. Present value of 1 at 8% for 10 periods Present value of 1 at 11% for 10 periods present value of an ordinary annuity at 8% for 10 periods Present value of an ordinary annuity at 11% for 10 periods 0.4632 0.3522 6.7101 5.8892 $6175020 2 $8250050 $8250o00 Click if you would like to Show Work for this question: gesn Shew work By a Question Attempts: 0 of 1 used 0 Earn Maximum Points available only if you

Explanation / Answer

Interest payment $600,000 p.a. for 10 years.

Redumption of face value at the end of bond life $7,500,000.

Hence Answer is "a" i.e. $6,175,020.

Particulars cash Flow P.V. factor @ 11% P.V. Interest $6,00,000 5.8892 $35,33,520 face value $75,00,000 0.3522 $26,41,500 $61,75,020

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