Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below] Enviro Company issues 10%, 10-year bonds with a par value of $290,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 112. Confirm that the bonds' selling price is approximately correct. Use present value Table B1 and Table B.3 in Appendix B. (Round all table values to 4 decimal places, and use the rounded table values in calculations.) x Price 88 1/2 Table Value Selling Price $256,650 Present Value 290,000 90,422 180,702 218,002 38,648 0.3118 $290,000 par (maturity) value $14,500 interest payment Price of Bond Difference due to rounding of table values 11.4699

Explanation / Answer

Selling par value * price = price 290,000 88 1/2 = 256650 Cash flow Table val PV $290,000 par (maturity) value 0.3118 90422 $14,500 interest payment 11.4699 166,314 price of bond 256736 difference due to rounding of table values -86

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