Accounting - 340 face value $1,000 Bond rate of return 11%...

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Question: On January 1, 2010, Fishbone Corporation purchased 340 of the $1,000 face value, 11%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2020, and pay interest annually beginning January 1, 2011. Fishbone purchased the bonds to yield 10%. How much did Fishbone pay for the bonds? Solution: Bond details No. of bonds
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Unformatted text preview: 340 face value $1,000 Bond rate of return 11% No. of year 10 Fishbone paid for the bond = Present value of bonds + Present value of Interest earned =340*1000*PVF (10%, 10years) + 340*110*PVAF (10%, 10 years) =340*1000*0.386 + 340*110*6.1446 =131,240+236,606 =$371,146 Fishbone has to pay $ 371,146 for the bond....
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This note was uploaded on 10/03/2011 for the course ACCOUNTING 103 taught by Professor Ngo during the Spring '11 term at University of California, Berkeley.

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