RandallHallAC202Quiz2

# RandallHallAC202Quiz2 - value tables Professor I need some...

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AC 202 Principles of Accounting II Name Randall Hall Park University Quiz 2A-Chapter 14 Multiple Choice Questions-( 10 Points Each ) Select the ONE, BEST Answer 1. A bond traded at 102½ means that: B. The bond traded at \$1,025 per \$1,000 bond. 2. The payment pattern for an installment note that promises accrued interest plus equal amounts of principal includes: E. All of the above. 1

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3. An advantage of bond financing is: E. All of the above. 4. A discount on bonds payable: A. Occurs when a company issues bonds with a contract rate less than the market rate. Problem ( 60 points ) SHOW ALL WORK !!!!!!
. On January 1, a company issues bonds with a par value of \$300,000. The bonds mature in 5 years and pay 8% annual interest each June 30 and December 31. On the issue date, the market rate of interest is 6%. Compute the price of the bonds on their issue date. The following information is taken from present
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Unformatted text preview: value tables: Professor, I need some help understanding this. I know the key factors are: 10 periods, 300,000 * 8% (12000) each period, discount rate of 3% per period, but I’m not sure how to actually calculate the price of the bonds. I googled how to calculate this since I didn’t see the formula in the book (where is it?) and I found how to get the correct answer using Microsoft Excel using the formula: =PV(3%,10,12000,300000) which gives you the answer of (\$325,590.61) which I think is the correct answer, but I don’t honestly know how to calculate that without MS Excel. So, for the sake of the quiz I guess that’s my answer (\$325,590.61), but for the sake of understanding, will you explain how to calculate this without relying on Excel to make the calculation? Thanks, Randy 3...
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## This note was uploaded on 07/10/2011 for the course AC 202 taught by Professor Nancyeverett during the Spring '09 term at Park.

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RandallHallAC202Quiz2 - value tables Professor I need some...

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