On January 1 of the current year, Monarch Gaming Company issues 4-year , $600,00

Question

On January 1 of the current year, Monarch Gaming Company issues 4-year, $600,000 face value, 4% face rate, coupon bonds which pay interest semi-annually each June 30 and each December 31. On January 1 of the current year, when the bonds are issued to the public, the market rate of interest on similar bonds is 6%.


Calculate the amount at which Monarch Gaming will issue the bonds on January 1 of the current year [i.e., what is the amount of cash which will be received].

[hint: need time value of money tables]

a. $504,565

b. $600,006

c. $520,028

d. $557,876

Explanation / Answer

semi-annual. therefore, N=8 (4yearsx2), I/Y=3 (6%/2), PMT= 12000(600000x4%/2), FV=600,000 solving for PV u get 557876

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.