Question

Waterway Railroad Co. is about to issue $460,000 of 6-year bonds paying an 7% interest rate,...

Waterway Railroad Co. is about to issue $460,000 of 6-year bonds paying an 7% interest rate, with interest payable semiannually. The discount rate for such securities is 8%.

Click below to view the factor tables.
Table 1. Future Value of 1
Table 2. Future Value of an Annuity of 1
Table 3. Present Value of 1
Table 4. Present Value of an Annuity of 1

(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

In this case, how much can Waterway expect to receive from the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,525.)

Waterway can expect to receive $
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Face Value of Bonds = $460,000

Annual Coupon Rate = 7.00%
Semiannual Coupon Rate = 3.50%
Semiannual Coupon = 3.50% * $460,000
Semiannual Coupon = $16,100

Annual Discount Rate = 8.00%
Semiannual Discount Rate = 4.00%

Time to Maturity = 6 years
Semiannual Period = 12

Issue Price of Bonds = $16,100 * Present Value of an Annuity of $1 (4.00%, 12) + $460,000 * Present Value of $1 (4.00%, 12)
Issue Price of Bonds = $16,100 * 9.38507 + $460,000 * 0.62460
Issue Price of Bonds = $438,416

Waterway can expect to receive $438,416

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Concord Railroad Co. is about to issue $330,000 of 8-year bonds paying an 9% interest rate,...
Concord Railroad Co. is about to issue $330,000 of 8-year bonds paying an 9% interest rate, with interest payable semiannually. The discount rate for such securities is 8%. Click below to view the factor tables. Table 1. Future Value of 1 Table 2. Future Value of an Annuity of 1 Table 3. Present Value of 1 Table 4. Present Value of an Annuity of 1 (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) How...
Brief Exercise A-14 Dempsey Railroad Co. is about to issue $262,000 of 10-year bonds paying an...
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...
Concord Corporation is about to issue $290,000 of 10-year bonds paying an 12% interest rate, with...
Concord Corporation is about to issue $290,000 of 10-year bonds paying an 12% interest rate, with interest payable annually. The discount rate for such securities is 10%. Click here to view the factor table 1. Table 2 Table 3 Table 4 How much can Concord expect to receive for the sale of these bonds? (For calculation purposes, use 5 decimal places as displayed in the factor table provided,e.g. 5.25471. Round answer to 0 decimal places, e.g. 2,525.)
Dempsey Railroad Co. is about to issue $290,000 of 8-year bonds paying an 11% interest rate,...
Dempsey Railroad Co. is about to issue $290,000 of 8-year bonds paying an 11% interest rate, with interest payable semiannually. The discount rate for such securities is 12%. 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.)
Cullumber Company is about to issue $336,000 of 9-year bonds paying an 11% interest rate, with...
Cullumber Company is about to issue $336,000 of 9-year bonds paying an 11% interest rate, with interest payable annually. The discount rate for such securities is 10%. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) How much can Cullumber expect to receive for the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,575.) Cullumber can expect to receive $enter a dollar amount to be...
vanhoe Company is about to issue $344,000 of 6-year bonds paying an 11% interest rate, with...
vanhoe Company is about to issue $344,000 of 6-year bonds paying an 11% interest rate, with interest payable annually. The discount rate for such securities is 10%. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) How much can Ivanhoe expect to receive for the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,575.) Ivanhoe can expect to receive $enter a dollar amount to be...
Sunland Company is about to issue $450,000 of 10-year bonds paying an 11% interest rate, with...
Sunland Company is about to issue $450,000 of 10-year bonds paying an 11% interest rate, with interest payable annually. The discount rate for such securities is 13%. 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 Sunland expect to receive from the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,575.)
Brief Exercise A-3 Liam Company signed a lease for an office building for a period of...
Brief Exercise A-3 Liam Company signed a lease for an office building for a period of 10 years. Under the lease agreement, a security deposit of $7,300 is made. The deposit will be returned at the expiration of the lease with interest compounded at 7% per year. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What amount will Liam receive at the time the lease expires? (Round...
Dempsey Railroad Co. is about to issue $400,000 of 10-year bonds paying an 11% interest rate,...
Dempsey Railroad Co. is about to issue $400,000 of 10-year bonds paying an 11% interest rate, with interest payable annually. The discount rate for such securities is 10% How much can Dempsey expect to receive for the sale of these bonds?
Waterway Inc. issues $2,117,200 of 8% bonds due in 12 years with interest payable at year-end....
Waterway Inc. issues $2,117,200 of 8% bonds due in 12 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 9%. Click here to view factor tables What amount will Waterway receive when it issues the bonds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.) Amount received by Waterway when bonds were issued $_________
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT