Question

Brief Exercise A-14 Dempsey Railroad Co. is about to issue $262,000 of 10-year bonds paying an 11% 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 Dempsey expect to receive from the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,525.) Dempsey can expect to receive $

Answer 1

Face Value (fv)					$       2,62,000
Number of period (nper)					20
Semi annual coupon(pmt)			262000*5.5%		$           14,410
Semi annual Yield to maturity(rate)					6%
Issued Proceeds		=	=-pv(rate,nper,pmt,fv,0)
		=	=-pv(F4,F2,F3,F1,0)
		=	$       2,46,974
Thus,
		Dempsey can expect to receive			$       2,46,974