Taylor Troutman Project 3 Insert Page Layout Formulas Data Review Vievw Calibri
ID: 2524171 • Letter: T
Question
Taylor Troutman Project 3 Insert Page Layout Formulas Data Review Vievw Calibri (Body) 11 AA Paste ?+- .. Merge & Center . NFT Consulting and Sales Inc Cash Received/Annual Cash Payment Requirement The company could issue $2.000,000 ofiong-term bonds, due in 5 years with a stated rate of interest,paid semiannually, of 4%. The market rate for similar debt is 6%. s Cash Received Annual Cash Required Face amount 2,000,000 ace rate Interest Payment periods Interest Payment Term Periods Market rate PV factors used 10 13 14 1s 10 17 18 19 single sum annuity PV face PV interest 20 21 23 The company could issue $1,500,000 of long-term bonds, due in 4 years with a stated rate of interest,paid 24 semiannually, of 8%. The market rate for similar debt is 6%. 25 26 27 28 Cash Received Annual Cash Required Face amount Face rate Interest Payment periods Interest Payment Term Market rate 31 32 Project Information pctb Asset aquisitions planned financing options ReadyExplanation / Answer
Cash Received Annual Cash required 2,000,000.00 80,000 Face Amount $ 2,000,000 Face Rate 4% Interest Payment Periods 10 Interest Payment $ 40,000 (2000000*4%/2) Term 5 Periods 10 Market Rate 6% PV Factor used single sum 0.7441 =(1/1.03)^10 since semi annual payment rate used for pv factor would be 6%/2=3% Annuity 8.5302 =PV(3%,10,-1,0,0) PV Face $ 1,488,188 PV interest $ 341,208 Cash Received Annual Cash required 1,500,000.00 120,000 (1500,000*8%) Face Amount $ 1,500,000 Face Rate 8% Interest Payment Periods 8 Interest Payment $ 60,000 (1500000*8%/2) Term 4 Market Rate 6% PV Factor used single sum 0.7894 =(1/1.03)^8 since semi annual payment rate used for pv factor would be 6%/2=3% Annuity 7.0197 =PV(3%,8,-1,0,0) PV Face $ 1,184,114 PV interest $ 421,182
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