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Gomez Company is about to issue $800,000 of 10-year bonds paying an 8% interest rate with interest payable semiannually. The discount rate for such securities
Gomez Company is about to issue $800,000 of 10-year bonds paying an 8% interest rate with interest payable semiannually. The discount rate for such securities is 10%. Below are time value of money factors that Gomez uses to calculate compounded interest. 10 periods, 8% 20 periods, 10 periods, 20 periods, 4% 10% 5% Present value 1 0.46319 0.45639 0.38554 0.37689 Future value 1 2.15892 2.19112 2.59374 2.65330 Present value of an annuity of 1 6.71008 13.59033 6.14457 12.46221 Future value of an annuity of 1 14.48656 29.77808 15.93743 33.06595 To the closest dollar, how much can Gomez expect to receive for the sale of these bonds? A. $700,303. B. $585,274. C. $1,600,000. D. $2,811,006
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