LaTanya Corporation is planning to issue bonds with a face value of $103,000 and

Question

LaTanya Corporation is planning to issue bonds with a face value of $103,000 and a coupon rate of 8 percent. The bonds mature in seven years. Interest is paid annually on December 31. All of the bonds will be 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.)

Required:

Compute the issue (sale) price on January 1 of this year for each of the following independent cases:

a. Case A: Market interest rate (annual): 8 percent.

Issue price-?

b. Case B: Market interest rate (annual): 6 percent.

Issue price=?

c. Case C: Market interest rate (annual): 9 percent.

Issue price=?

Explanation / Answer

Issue (sale) price on January 1 of this year for each of the following independent cases is as calculated below:

Table value are based on: n= 7 i= 8% Cash Flow Table Value Amount Present Value Par (maturity value) 0.58349 103,000 60,099 Interest (annuity) 5.20637 8,240 42,900 103,000

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.