lFlaye/Homework.aspx2homeworkld-4333478708q ACC 215S Interme Homework: Chapter 1
ID: 2563692 • Letter: L
Question
lFlaye/Homework.aspx2homeworkld-4333478708q ACC 215S Interme Homework: Chapter 16 Homework Score: 0 of 10 pts E16-1 (book/static) 1 of 2 (0 The Davis Group acquired S4 500.000 par value, 4%, 20-year bonds on their date of Sue, January 1 of the curent year The market rate at he time ofissue was 6% and interest is paid annually on December 31 Davis I se the effective interest rate method to account for this investment. Davis intends to lh ld the investment until the bonds mature Read the requirements. Requirement a. Determine the purchase price of the investment in bonds. (Use the present value and future value tables tables or the formula method, use factor amounts rounded to five decimal places, X.X00XX. Round intermediary currency The purchase price of the bonds is $Explanation / Answer
Calculate purchase price of the bonds :
Purchase price of bonds = Present value of interest+Present value of maturity
= (4500000*4%*11.46992)+(4500000*0.31180)
= (2064585.60+1403100)
Purchase price of bonds = 3467686
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