On January 1 would raise. Loreno nc. issued a 15-year sem annual bond with a fac

Question

On January 1 would raise. Loreno nc. issued a 15-year sem annual bond with a face value o $960,000 with a coupon rate of 4%. On he date of issue, the market rate or similar bonds was 4%. Loreno would like to know how much this issuance What framework will you use to solve this problem? Cost-Volume-Profit (CVP) Time Value of Money (TVM) Normal or Normal Approximation Binomial Probability - B(n, p) Complete the table below. Be sure to enter dollar signs, commas, and percent signs when appropriate. TVM Data Tablo PV PMT FV UNGRADED] Based on the relationship between the two given interest rates, do you think this bond will be issued at par a discount What is the value of the ordinary annuity factor, AO), that is used to value the cash fiows of the interest payments? What is the value of the discount factor, DFO, that is used to discount the maturity value? How much does Loreno raise from this issue? On your own] Were you correct about whether the bond was issued at a premium, discount, or at par? You may ignore transaction costs. Present Value of 1 12% 0.95147 0.90573 0.86261 0.90529 0.82035 0.74409 0.67556 0.55839 0.86135 0.743010.84186 0.55626 0.41727 0.81954 0.672070.5536 0456390.31180 0.779770.609530.477610.375120.23300 0.74192 0.552070.41199 0.308320.17411 0.87165 0.45289 0.30666 0.20829 0.0972220.046031 0.010747 0.00018329 0.60804 0.1371530.228110.140710.054288 0.021321 0.0034602 0.000021326 0.68058 0.56743 0.46319 0.31524 0.21455 0.14602 0.088230.0046180 0.3411 0.11635 0.039689 0.013538 0.82193 0.74726 10 0.32197 0.18270 0.10367 15 25 30 0.099377 0.033378 0.0015752 60 0.55045 304780.16973 0.095060 0.030314 0.0098759 0.0011141 0.0000024814

Explanation / Answer

The price of bond can be found out using concept of time value of money

Price of bond = Interest*PVIFA(YTM%,n) + Redemption value*PVIF(YTM%,n)

Interest = 960,000*4%/2 = 19200$

YTM = 2%

n= 15*2 = 30

Price of Bond = 19200*PVIFA(2%,30) + 960000*PVIF(2%,30)

=19200*22.39646 + 960000*0.552071

=430011.9 + 529988.1

=960000$

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