1) Ayayai Corporation issues $560,000 of 9% bonds that are due in 8 years and pay interest semi-annually. At the time of issue, the market rate for such bonds is 8%. Calculate the bonds issue price by using (1) factor Tables A.2 and A.4, (2) a financial calculator, or (3) Excel function PV. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.)

Issue price of bond

$ _______

2) Pharoah Ltd. signed an instalment note on January 1, 2020, in settlement of an account payable of $30,500 owed to Mott Ltd. Pharoah is able to borrow funds from its bank at 8%, whereas Mott can borrow at the rate of 7%. The note calls for two equal payments of blended principal and interest to be made at December 31, 2020 and 2021. Using (1) factor Table A.4, (2) a financial calculator, or (3) Excel function PV, calculate the amount of the equal instalment payments that will be made to Mott Ltd. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 5,275.75.)

Amount of the equal instalment to be paid ________