![Paulalex8765](/avatars/13877.jpg)
Paulalex8765
19.07.2021 •
Business
Marwick Corporation issues 8%, 5-year bonds with a par value of $1,100,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%.
What is the bond's issue (selling) price, assuming the following Present Value factors:
1n = i = Present value of an annuity Present value of 1
(Series of payments) (Single sum)
5 8% 3.9927 0.6806
10 4% 8.1109 0.6756
5 6% 4.2124 0.7473
10 3% 8.5302 0.7441
Solved
Show answers
More tips
- F Family and Home How to Choose the Best Diapers for Your Baby?...
- H Health and Medicine Headache: A Comprehensive Guide to Treatment...
- C Computers and Internet How to Properly Order Clothing from International Online Stores...
- A Auto and Moto Mastering One-Movement Parking: All You Need to Know...
- D Dating, Love, Relationships How Long Can Love Last?...
- S Society and Politics Is It Fact or Fiction? Let s Talk About Anton Chekhov s Pseudonym...
- F Food and Cooking How to Find Your Zip Code?...
- S Style and Beauty How to choose the best mascara for your eyelashes...
- S Style and Beauty How to Apply Foundation Correctly?...
- S Sport How to Choose Tennis Rackets?...
Answers on questions: Business
- M Mathematics Daniel has 2 cookies, Maya has 2 Cookies. If Daniel and Maya put their cookies together how many will the have in all. Please help, I can t figure this one out....
- E English Story: The fight for the right to vote. List the four events in the chart to show the chronology of women s fight for the right to vote. . Wyoming gave females the right to vote •...
Ответ:
$1,193,838.80
Explanation:
The price of a bond is the sum of the present value of the coupon payments and the face value at maturity.
= Present value of coupon payments + Present value of face value at maturity
First adjust the variables for semi-annual:
Number of periods = 5 * 2 = 10 semi annual periods
Coupon payment = 8% * 1,100,000 * 1/2 years = $44,000
Yield = 6% / 2 = 3%
Present value of coupon payments:
The coupon payments are constant so are an annuity:
= Annuity * Present value of an annuity factor, 10 periods, 3%
= 44,000 * 8.5302
= $375,328.80
Present value of face value
= 1,100,000 * Present value of 1, 3%, 10 periods
= 1,100,000 * 0.7441
= $818,510
Selling price:
= 375,328.80 + 818,510
= $1,193,838.80
Ответ:
PIPER
Explanation: