Hartford Research issues bonds dated January 1, 2015, that pay interest semiannu

Question

Hartford Research issues bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. The bonds have a $29,000 par value and an annual contract rate of 8%, and they mature in 10 years. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round all table values to 4 decimal places, and use the rounded table values in calculations.) Required: Consider each of the following three separate situations. 1. The market rate at the date of issuance is 6%. (a) Complete the below table to determine the bonds' issue price on January 1, 2015. I also need to know how to get n and i as well as the market rate for 8% and 10%

Explanation / Answer

(a)

Bond Issue price is computed as under:

Particulars Amount Present Value of Semiannual interest of $1,160 for 10 years is $17,258 (1,160*14.8775(Cumulative factor of 20 periods of 3%) Present value of a single payment at the Maturity date $29,000 *.5537(Factor at end of 20th period of 3%) $16,057 Issue price of bond $33,315

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