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Balloon Corporation is issuing $700,000 of 8%, 4-year bonds when potential bond investors want a return of 10%. Interest is payable semiannually. 9% 0.820 9
Balloon Corporation is issuing $700,000 of 8%, 4-year bonds when potential bond investors want a return of 10%. Interest is payable semiannually.
9% 0.820 9 10 0.905 Present Value of an Ordinary Annuity of $1 per period 7% 6% 4% 1% 5% 3% 2% Per. 0 990 0.980 1 0.971 0.962 0.943 0.952 0.935 2 1.942 1.970 1.913 1 886 1.808 1.859 1.833 3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 5 4.853 4.713 4.580 4.452 4.329 4.212 4.100 6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 9 8.566 8.162 7.786 7.435 7 108 6.802 6.515 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 8% 0.926 0.917 0.909 0.90 1.783 1.759 1.736 1.713 2.577 2.531 2.487 2.44 3.312 3.240 3.170 3.10 3.993 3.890 3.791 3.69 4.623 4.486 4.355 4.23 5.206 5.033 4.868 4.712 5.747 5.535 5.335 5.14 6.247 5.995 5.759 5.537 6.710 6.418 6.145 5.885 Requirement: 1) Calculate the present value of the Principal. 2) Calculate the present value of Interest Payments. 3) What is the selling price of the bond? 4) Did the bond sell at face value, discount, or a premium? Edit View Insert Format Tools Table 12pt v Paragraph v BI U AYAT > Step by Step Solution
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