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devbar3416
25.10.2019 •
Mathematics
On january 1, year 1, klondike issued 10-year bonds with a stated rate of 10% and a face amount of $100,000. the bonds pay interest annually. the market rate of interest was 12%. calculate the issue price of the bonds. round your answer to the nearest dollar. $93,643
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Ответ:
$88700
Step-by-step explanation:
Coupon interest = $100000*10% = $10000
To calculate the issue price we will have to discount all the coupon payments and the face amount using 12%.
To discount coupon payments we will use the formula of present value of ordinary annuity:
PV = PMT×(1-(1/(1+i)^n)/i
where;
PMT = coupon payment = $10000
i = Interest rate which is to be used to discount = 12%
n = no. or periods = 10 years
PV = $56502.23
And present value of face amount = $100000/(1.12)^10 = $32197.32
Issue price = $56502.23 + $32197.32
= $88699.55 ≈ $88700
Ответ:
c
Step-by-step explanation: