Homework: Chapter 12 Homework MyL Save Score: 0 of 10 pts Hw Score: 67.26%, 67.2
ID: 2521993 • Letter: H
Question
Homework: Chapter 12 Homework MyL Save Score: 0 of 10 pts Hw Score: 67.26%, 67.26 of 100 pts E12A-29 (similar to) rates determine the present value of future amounts. (Round all numbers to the nearest whole dollar.) (Click the ioon to view the Present Value of $1 table.)(Cick the icon to view the Presont Value of Annuity of $1 table.) Do Requirements 2. 3. Same bonds payable as in Requirement 1, but the market interest rate is 16%. Same bonds payable as in Requirement 1, but the market interest rate is 10% Req i4%, paid somiar nually The market rate of interest is 14% at issuance. Round interim calculations and firal answer to the nearest whole dollar. Enter any number in the edit fields and then click Check Answer. partsExplanation / Answer
1.Present Value of Bond at Market Rate 14% = $86,000
2.Present Value of Bond at Market Rate 16% = $79,509
3.Present Value of Bond at Market Rate 16% = $1,01,257
1.Present Value of Bond at Market Rate 14% = $86,000
If the Market Rate and Interest Rate is Same, Then the present value of the bond will be equal to the Face Value
Present Value of Bond
= $86000(PVF 7%,12 Years) + $6020(PVAF 7%, 12 Years)
= ($86000 x 0.444) + ( $6020 x 7.943)
= $86000
2.Present Value of Bond at Market Rate 16% = $79,509
Present Value of Bond
= $86000(PVF 8%,12 Years) + $6020(PVAF 8%, 12 Years)
= ($86000 x 0.397) + ( $6020 x 7.536)
= $79,509
3.Present Value of Bond at Market Rate 16% = $1,01,257
Present Value of Bond
= $86000(PVF 8%,12 Years) + $6020(PVAF 8%, 12 Years)
= ($86000 x 0.397) + ( $6020 x 7.536)
= $1,01,257
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