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Unformatted text preview: of $800,000 to be received in 5 years discounted at 9% is therefore $519,944 ($800,000 X .64993). Concord Company should therefore invest $519,944 to have $800,000 in five years. BRIEF EXERCISE C13 i = 4% ? $400,000 Diagram for Principal 0 1 2 3 4 19 20 i = 4% ? $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 Diagram for Interest 0 1 2 3 4 19 20 Present value of principal to be received at maturity: $400,000 X 0.45639 (PV of $1 due in 20 periods at 4% from Table 3) . ............................................................. $182,556 * Present value of interest to be received periodically over the term of the bonds: $18,000 X 13.59033 (PV of $1 due each period for 20 periods at 4% from Table 4) . ....................................................................... 244,626* Present value of bonds . .............................................................. $427,182* *Rounded....
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This note was uploaded on 12/13/2011 for the course ECON 15A taught by Professor Shirey during the Fall '08 term at UC Irvine.
 Fall '08
 Shirey

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