On December 31, 2018, Interlink Communications issued 6% stated rate bonds with a face amount of $104 million. The bonds mature on December 31, 2048. Interest is payable annually on each December 31, beginning in 2019. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Determine the price of the bonds on December 31, 2018, assuming that the market rate of interest for similar bonds was 7%

Table Values are based on 

N= 
30 Years 

I= 
7% 

Cash Flow 
Amount 
Present Value 
Interest 
$6.24 million 
$ 13.6622 million 
^{ }Principal 
$104 million 
77.4324 million 
Price of Bond 
$91.0946 million 

$91.095 million [Rounded] 
Workings
Face Value = $104 Million
Interest Amount = $104 million x 6% = $6.24 Million
Market Rate = 7%
Period = 30 Years
Price of the Bond = Present Value of the Interest + Present Value of the Face Value
= $6.24 million x (PVIF 7%,30 Years) + $104 million x (PVF 7%, 30 Years)
= [ $6.24 million 12.409041 ] + [ $104 million x 0.131367 ]
= $ 13.6622 million + 77.4324 million
= $91.0946 million
= $91.095 (Rounded)
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