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Question

Chapter 14 Homeworx × Please I Just Dont Need x × > d Secure https://newconnect.mheducation.com/flow/connect.html Chepter 1 lomework Help Save &Exit Submit 1. Calculate the price of a bond using the Excel PV function 3 Bond Pricing Excel HOME INSERT PAGE LAYOUT FORMULAS DATA REVIOW VE Sign In 2.08 coints BIU A- Alent Number Conditional Format s Cell CellEditing Pastc Tormatting- Table Styles A1 X On January 1, Ruiz Company issuod bonds as follows: Print Ruiz Conm ssued honds as fbllaws: 2 Face Value 3 Number of Years: 4 Stated Interest Hate: 5 Interest 6 (Note: the bonds interest 500,000 pay interest semi-annually.) Required: 91Glven the different market Interest rates below, calculate the following items 10 Calculate the bond selling price USING THE EXCEL PV FUNCTION (fx. Note: Enter al n orguments as cell references. 12 12 a) Market Interast Rate: 4 Suniannual Interest Payment: 15 Bond Selling Price 16 17 b Market Interest Rate 18 Semiannual Interest Payment: 9% 8:30 PM Type here to search 9/14/2018

Explanation / Answer

Answer: Requirement 1 Market Interest Rate 9% Semiannual Interest payment $                   17,500.00 ($500,000*7%/2) Bond Selling Price 3,96,810 =pv(4.5%,60,-17500,-500000,0) Market Interest Rate 5.50% Semiannual Interest payment $                   17,500.00 ($500,000*7%/2) Bond Selling Price 6,09,585 =pv(2.75%,60,-17500,-500000,0) Requirement 2 The bond in (a) sold at a: discount The bond in (b) sold at a: premium

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