Question

ABC issues 6%, 10 year bonds with a face amount of $100,000. The market interest rate...

ABC issues 6%, 10 year bonds with a face amount of $100,000. The market interest rate for bonds of similar risk and maturity is 4%. Interest is paid semiannually. At what price will the bonds issue?

116,222

116,351

117,155

116,024

115,873

Homework Answers

Answer #1
Computation Of Bond Price
a Annual Interest Amount $                 6,000.00
($100000*6%)
b PV Annuity Factor for (10 Years,4%) 8.110896
c Present Value Of Annual Interest (a*b) $              48,665.37
d Redemption Value $            100,000.00
e PV Factor Of (10 Years,4%) 0.67556
g Present Value Of Redemption Amount (d*e) $              67,556.42
f Value   Of The Bond (c+g) $                  116,222
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