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Unformatted text preview: Inc. receives a premium (more cash than the principal amount) from the purchasers. The purchasers are willing to pay more for the bonds because the purchasers will receive interest payments of $600 when the market interest payment on the bonds was only $500. Present Value of Bond Sold Above Market Interest Rate Cash Flows Present Value Factor Present Value Principal Payment $10,000 .3769 $3,769 Interest Payments 600 12.4622 7,477 Price of Bond $ 11,246...
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- Spring '08