A $5 million bond was issued at face value on June 1, 2017. The bond has a twenty five year term and a fixed interest rate of 4% paid annually. At the time of issuance, the current market rate of interest is also 4%.

Using the present value tables, demonstrate why the bond was issued at face value ($5 million) by calculating the present value of both the principal and interest using Table P and Table I.

Present Value of 1 Table (PV of 1 Table) Present Value Factors for 1.000 at Compound Interest Rounded to three decimal places. Example: When interest is 89 per period and it is compounded each period, receiving 1.000 at the end of the 10th period has a present value of 0.463. 152434445465 84 105 12% 11 0.990 0.980 0.971 0.962 0.952 0.9431 0.9261 0.909 0.893 2 0.980 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 3 0.971 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 4 0.961 0.9241 0.880.8551 0.8231 0.7921 0.7351 0.60306361 5 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 6 0.942 0.888 0.837 0.790 0.746 0.7051 0.630 0.564 0.507 71 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 $ 0.923 0.853 0.780 0.731 0.6771 0.622105401 0.4671 0.404 91 0.914 0.837 0.766 0.7031 0.645 0.592 0.500 0424 0.361 101 0.905 0.820 0.7441 0.6761 0.6141 0.558 0463 0.3861 0.322 11 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 0.287 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 13 0.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 1758 0.661 0.577 0.05 0.442 0.340 0.263 0.205 15 0.861 0.743 0.642 0.555 0.481 0.417 0.313 0.239 0.183 16 0.853 0.728 0.623 0.534 0.45 0.394 0.292 0.218 0.163 17 0.844 0.714 0.605 0.513 0.436 0.371 0.270 0.198 0.146 18 0.836 0.700 0.587 0.494 0.416 0.350 0.250 0.180 0.130 19 0.828 0.686 0.570 0.475 0.396 0.331 0.232 0.164 0.116 201 0.820 0.673 0.354 0.456 0.377 03121 0.2151 0.149 0.104 21 0.811 0.660 0.538 0.439 0.359 0.294 0.1991 0.135 0.093 22 0.803 0.647 0.522 0.422 0.342 0.278 0.184 0.123 0.083 23 0.795 0.634 0.507 0.406 0.326 0.262 0.170 0.1121 0.074 241 0.788 0.622 0.492 0.390 0.310 0.247 0.158 0.1021 0.066 25 0.780 0.610 0.478 0.375 0.295 0.233 0.146 0.092] 0.059 26 0.772 0.598 0.464 0.361 0.281 0.220 0.135 0.084 0.053 27 0.764 0.586 0.450 0.347 0.268 0.207 0.125 0.076 0.047 28 0.757 0.574 0.437 0.333 0.25% 0.196 0.116 0.069 0.042| 29 0.749 0.563 0.424 0.321 0.243 0.185 0.107| 0.063 0.037 30 0.742 0.552 0.412 0.308 0.231 0.174 0,099 0.057 0.033 Present Value of an Ordinary Annuity Table Present Value Factors for an Ordinary Annuity (PVOA Factors) for 1.000 per Period Rounded to three decimal places. Examples When interest is 6% per period and it is compounded each period, receiving 1.000 at the end of each period for 8 periods has a present value of 6.210. 1424344454684104 124 11 0.990 0.980 0,971 0.962 0.952 0943 0.926 0.909 0.893 2 1.970 1.942 1.913 1.886 1.859 1833 1.783 1.736 1.690 3 2941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 4 3.902 3.808 3.717 3.630 3.546 3.4651 3.3121 3.170 3.037| 5 4.853 4.713 4.580 4.452 4.329 42121 3.993 3.791 3.605 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 71 6.728 6.472| 6.230 6.002 5.786 55825.206 4.868 4.564 8 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335| 4.968 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5328 10 9.471 8.983 8.530 8.111 7.722 7360 6.710 6.145 5.650 11 10.368 9.787 9.253 8.760 8.306 7887 7.139 6495 5938 11.255 10.575 9.954 9.385 8.863 8384 7.536 6.814 6.194 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6811 16 14.718 13.578 12.561 11.652 10.838 10.106 8.851 851 7.824 6974 6.974 17| 15562 14.292 13.166 12.166 11.274 10.477 9.122 8.022 7.120 18| 16.398 14.992 13.754 12.659 11.690 10.828 9.3721 8.201 19 17.226 15.678 14.324 13.134 12.085) 11.158 9.604 8.365 7366 2018.046 16.351 14.877| 13.590 12.462 11.470 9.818 8.514 7469 21 18.857 17.011 15.415 14.029 12.821 11.764 10.017| 8.649 7562 22 19.660 17.658 15937| 14.451 13.163 12.042 10.2011 8.772 7.645 23 20.456 18.292 16.444 14.857 13.489 12 303 10371 8.883 7.718 24 21.243 18.914 16.936 15 247 13.799 12.550 10.529 8.985 7.784 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7843 26 22.795 20.121| 17.877| 15.983 14.375 13.003 10.810 9.161 7896 27 23560 20.707 18.327| 16.330 14.643 13.211 10.935 9.237| 7943 28 2431621.281 18.764 16.663 14.898 13.406 11.051 9.307 7984 29 25.066 21.844 19.188| 16.984 15.141 13.591 11.158 9.370 8.022 30 25.808 22.396 19.600 17 292 15.372 13.765 11.258 9.427 8.055