Waterhouse Company plans to issue bonds with a face value of $500,000 and a coup
ID: 2510356 • Letter: W
Question
Waterhouse Company plans to issue bonds with a face value of $500,000 and a coupon rate of 10 percent. The bonds will mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds are sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.) Determine the issuance price of the bonds assuming an annual market rate of interest of 8 percent. ssuance priceExplanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Annual Interest = 500,000 * 5% 25,000.00 PVF for 10 years at 4% 13.5903 Present Value of coupon Payment 339,758.16 Present Value of maturity payment = 500,000* .4564 228,200.00 Issuance Price of Bonds = 339,758.16 + 228,200 567,958.16 Time PVf at 4% 0.50 0.9615 1.00 0.9246 1.50 0.8890 2.00 0.8548 2.50 0.8219 3.00 0.7903 3.50 0.7599 4.00 0.7307 4.50 0.7026 5.00 0.6756 5.50 0.6496 6.00 0.6246 6.50 0.6006 7.00 0.5775 7.50 0.5553 8.00 0.5339 8.50 0.5134 9.00 0.4936 9.50 0.4746 10.00 0.4564 PVF for 10 Years 13.5903
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.