Original Question: (already solved) On July 1, 2014, Bryant Industries Inc. issu
ID: 2490206 • Letter: O
Question
Original Question: (already solved)
On July 1, 2014, Bryant Industries Inc. issued $100,000,000 of 20-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $91,420,905. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Just need help with this part:
Compute the price of $91,420,905 received for the bonds by using Table 1 and Table 2. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.
I need to solve the following:
Present value of the face amount: _________
Present value of the semi-annual interest payments: ________
Price received for the bonds: $91,420,905
I need to solve the following:
Present value of the face amount: _________
Present value of the semi-annual interest payments: ________
Price received for the bonds: $91,420,905
Explanation / Answer
T= 20*2 = 40 years I = 10%/2 = 5%
For principal see present value of $1 table for 40 years at 5%
And for interest see ordinary annuity table for 40 years at 5%
Principal
100,000,000*.14205 = 14,205,000
Interest
100,000,000 *4.5% = 4,500,000
So 4,500,000 * 17.15909 = 77,215,905
Present value =91,420,905
T= 20*2 = 40 years I = 10%/2 = 5%
For principal see present value of $1 table for 40 years at 5%
And for interest see ordinary annuity table for 40 years at 5%
Principal
100,000,000*.14205 = 14,205,000
Interest
100,000,000 *4.5% = 4,500,000
So 4,500,000 * 17.15909 = 77,215,905
Present value =91,420,905
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