Answer ofChapter 15

Answer ofChapter 15 - Ex. 158 Present value of $1 for 10...

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Ex. 15–8 Present value of $1 for 10 (semiannual) periods at 5% (semiannual rate). ......................... 0.61391 Face amount of bonds. .............................................. × $20,000,000 $ 12,278,200 Present value of an annuity of $1 for 10 periods at 5%. ............................................. 7.72174 Semiannual interest payment . .................................. × $900,000 6,949,566 Total present value (proceeds) . ................................ $ 19,227,766 Ex. 15–9 Present value of $1 for 10 (semiannual) periods at 5.5% (semiannual rate). ...................... 0.58543 Face amount of bonds. .............................................. × $15,000,000 $ 8,781,450 Present value of an annuity of $1 for 10 periods at 5.5%. .......................................... 7.53763 Semiannual interest payment . .................................. × $900,000 6,783,867 Total present value (proceeds) . ................................ $ 15,565,317 Ex. 15–10 The bonds were selling at a premium. This is indicated by the selling price of 108.89, which is stated as a percentage of face amount and is more than par (100%). The market rate of interest for similar quality bonds was lower than 6.375%, and this is why the bonds were selling at a premium. Ex. 15–11 May 1 Cash. .................................................................... 12,000,000 Bonds Payable. ............................................... 12,000,000
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This note was uploaded on 10/20/2010 for the course E 2292 taught by Professor Linh during the Spring '10 term at Troy.

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Answer ofChapter 15 - Ex. 158 Present value of $1 for 10...

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