Question

Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $64,100,000 of...

Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $64,100,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $68,268,872. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

5. Compute the price of $68,268,872 received for the bonds by using Exhibit 5 and Exhibit 7. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount $
Present value of the semi-annual interest payments $
Price received for the bonds $

Homework Answers

Answer #1

Bond is a fixed income security in which issuer promises to pay a series of interest payment and to repay the principle on maturity to the investor.

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