This preview shows pages 1–5. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Exercise 142 1. Maturity Interest paid Stated rate Effective (market) rate 10 years annually 10% 12% Interest $100,000 x 5.65022 * = $565,022 Principal $1,000,000 x 0.32197 ** = 321,970 Present value (price) of the bonds $886,992 10% x $1,000,000 * present value of an ordinary annuity of $1: n=10, i=12% (Table 4) ** present value of $1: n=10, i=12% (Table 2) 2. Maturity Interest paid Stated rate Effective (market) rate 10 years semiannually 10% 12% Interest $50,000 x 11.46992 * = $573,496 Principal $1,000,000 x 0.31180 ** = 311,800 Present value (price) of the bonds $885,296 5% x $1,000,000 * present value of an ordinary annuity of $1: n=20, i=6% (Table 4) ** present value of $1: n=20, i=6% (Table 2) 3. MaturityInterest paidStated rateEffective (market) rate 10 years semiannually 12% 10% Interest $60,000 x 12.46221 * = $ 747,733 Principal $1,000,000 x 0.37689 ** = 376,890 Present value (price) of the bonds $1,124,623 6% x $1,000,000 * present value of an ordinary annuity of $1: n=20, i=5% (Table 4) ** present value of $1: n=20, i=5% (Table 2) 4. Maturity Interest paid Stated rate Effective (market) rate 20 years semiannually 12% 10% Interest $60,000 x 17.15909 * = $1,029,545 Principal $1,000,000 x 0.14205 ** = 142,050 Present value (price) of the bonds $1,171,595 6% x $1,000,000 * present value of an ordinary annuity of $1: n=40, i=5% (Table 4) ** present value of $1: n=40, i=5% (Table 2) Exercise 142 (concluded) 5. Maturity Interest paid Stated rate Effective (market) rate 20 years semiannually 12% 12% Interest $60,000 x 15.04630 * = $902,778 Principal $1,000,000 x 0.09722 ** = 97,220 Present value (price) of the bonds $999,998 actually, $1,000,000 if PV table factors were not rounded 6% x $1,000,000 * present value of an ordinary annuity of $1: n=40, i=6% (Table 4) ** present value of $1: n=40, i=6% (Table 2) Exercise 147 1. Price of the bonds at January 1, 2011 Interest $7,500,000 x 13.76483 * = $103,236,225 Principal $150,000,000 x 0.17411 ** = 26,116,500 Present value (price) of the bonds $129,352,725 5% x $150,000,000 * present value of an ordinary annuity of $1: n=30, i=6% (Table 4) ** present value of $1: n=30, i=6% (Table 2) 2. January 1, 2011 Cash (price determined above)................................ 129,352,725 Discount on bonds payable (difference)............... 20,647,275 Bonds payable (face amount)............................ 150,000,000 3. June 30, 2011 Interest expense ($7,500,000 + $688,243)........................ 8,188,243 Discount on bonds payable ($20,647,275 30)........ 688,243 Cash (5% x $150,000,000)........................................ 7,500,000 4. December 31, 2018 Interest expense ($7,500,000 + $688,243)........................ 8,188,243 Discount on bonds payable ($20,647,275 30)........ 688,243 Cash (5% x $150,000,000)........................................ 7,500,000 [Using the straightline method, each interest entry is the same.] Exercise 149...
View Full
Document
 Spring '11
 Franz

Click to edit the document details