3 ! Required information [The following information applies to the questions displayed below.] Part 2 of 2 Enviro Company issues 10%, 10-year bonds with a par value of $300,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2 10 polnts Confirm that the bonds' selling price is approximately correct (within .1%). 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.) 03:36:00 Par Value x Price Selling Price 88 1/2 300,000 265,500 eBook Present Value Cash Flow Table Value $300,000 par (maturity) value Hint $15,000 interest payment Price of Bond 265,500 Difference due to rounding of table values Print References TABLE B.1 p 1/(1i Present Value of 1 Rate 5% 8% 9% Perlods 1% 2% 3% 4% 6% 7% 10% 12% 15% 0.9434 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 2. 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9151 3 0.9706 0.9423 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.8219 0.6209 0.9057 0.8626 0.7835 0.7473 0.7130 0.6806 0.6499 0.5674 0.4972 0.7903 6 0.9420 0.8880 0.8375 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.8706 0.8131 0.6651 7 0.9327 0.7599 0.7107 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.6446 0.4604 0.2843 0.8368 0.7664 0.7026 0.5919 0.5439 0.5002 0.4241 0.3606 0.8203 10 0.9053 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.2149 11 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.8874 0.8787 0.1869 12 0.7885 0.7014 0.6246 0.5568 0,4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.2292 13 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.1625 0.3878 0.1413 14 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3405 0.2992 0.2633 0.2046 0.4173 15 0.8613 0.7430 0.6419 0.5553 0.4810 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 16 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.4363 0.3714 0.2311 0.1456 17 0.8444 0.7142 0.6050 0.5134 0.3166 0.2703 0.1978 0.0929 0.2120 18 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.1799 0.1300 0.0808 0.3305 19 0.8277 0.6864 0.5703 0.4746 0.3957 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.1486 20 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1037 0.0611 0.1160 0.0923 25 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0,0588 0.0304 0.0994 30 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0754 0.0573 0.0334 0.0151 35 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.1420 0.0460 0.0318 40 0.6717 0.4529 0.3066 0.2083 0.0972 0.0668 0.0221 0.0107 0.0037 Used to compute the present value of a known future amount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n- 12 and i 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest $2,784 today ($5,000 x 0.5568). TABLE B.3 /i (1i)" Present Value of an Annuity of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9615 0.9901 0.9804 0.9709 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9135 2 1.9704 1.9416 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.6901 1.6257 2,7232 2.5771 2,4018 2.9410 2.8839 2.8286 2.7751 2.6730 2.6243 2.5313 2.4869 2.2832 3.9020 3.5460 3.8077 3.7171 3.6299 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 4.1002 3.6048 5 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 3.9927 3.8897 3.7908 3.3522 3.7845 6 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 5.3893 4.5638 7 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.2064 5.0330 4.8684 4.1604 6.2098 8 7.6517 7.3255 7.0197 6.7327 6.4632 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 8.9826 7,0236 6.1446 10 9.4713 8.5302 8.1109 7.7217 7.3601 6.7101 6.4177 5.6502 5.0188 8.3064 8.8633 10.3676 7,8869 11 9.7868 9.2526 8.7605 7.4987 7.1390 6.8052 6.4951 5.9377 5.2337 9.3851 7.5361 12 11.2551 10.5753 9.9540 8.3838 7.9427 7.1607 6.8137 6.1944 5.4206 13 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 10.563 8.7455 14 13.0037 12.1062 11.2961 9.8986 9.2950 8.2442 7.7862 7.3667 6.6282 5.7245 11.1184 9.1079 15 13.8651 12.8493 11.9379 10.3797 9.7122 8.5595 8.0607 7.6061 6.8109 5.8474 7.8237 16 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 6.9740 5.9542 9.1216 6.0472 17 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 8.5436 8.0216 7.1196 14.9920 10.8276 9.3719 7.2497 18 16.3983 13.7535 12.6593 11.6896 10.0591 8.7556 8.2014 6.1280 10.3356 7.3658 6.1982 19 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 9.6036 8.9501 8.3649 20 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 10.6748 25 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 9.8226 9.0770 7.8431 6.4641 30 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 14.4982 35 29.4086 24.9986 21.4872 18.6646 16.3742 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 23.1148 17.1591 15.0463 11.9246 8.2438 40 32.8347 27.3555 19.7928 13.3317 10.7574 9.7791 6.6418 Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. For (n= 10, i= 9 % ) , the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177)