Loreno, Inc. plans to issue a 15-year semiannual bond with a face value of $550,000 with a coupon rate of 6%. On the date of issue, It expects the market rate for similar bonds will be 8%. Under these conditions, Loreno would like to know how much this issuance would raise. What framework will you use to solve this problem? Cost-Volume-Profit (CVP) Counting - Permutation or Combination Time Value of Money (TVM) Binomial Probability - B[n, p) Normal or Standard Normal Distribution Complete the table below. For the amounts (PV, PMT, & FV) please enter the number only with no dollar sign or commas. Do not forget to include percent signs, where appropriate. TVM Data Table T PV PMTT clyn 1 11 CUNGRADED) Before you perform any computation: Based on the relationship between the two given interest rates, do you think this bond will be issued at a premium par a discount Which type of annuity should you use for this problem? ordinary annuity annuity due What is the value of the annuity factor that is used to value the cash flows of the Interest payments? What is the value of the discount factor, DF0, that is used to discount the maturity value? . You may Ignore transaction costs. (round to cents two How much does Loreno raise from this issue? $ decimal places). [UNGRADED On your own) Were you correct about whether the bond was issued at a premium, discount, or at par? Present Value of 1 n 1% 2% 3% 4% 6% 8% 12% 24% 5 0.95147 0.90573 0.86261 0.82193 0.74726 0.68058 0.56743 0.34111 10 0.90529 0.82035 0.74409 0.67556 0.55839 0.46319 0.32197| 0.11635 15 0.86135 0.74301 0.64186 0.555260.41727 0.31524 0.18270 0.039689 0.81954 0.67297 0.55368 0.45639 0.311800.21455 0.10367 0.013538 0.779771 0.60953 0.47761 0.37512 0.233000.146021 0.058823 0.0046180 30 0.74192 0.55207 0.41199 0.30832 0.17411 0.099377 0.033378 0.0015752 400.67165 0.45289 0.30656 0.20829 0.097222 0.046031 0.010747 0.00018329 500.60804 0.137153 0.22811 0.14071 0.054288 0.021321 0.0034602 0.000021326 600.55045 0.30478 0.16973 0.095060 0.030314 0.0098759 0.00111410.0000024814 20 25 0.12 n] 5 Present Value of an Ordinary Annulty of 1 | 15 | 2% | 3% | 4% | 6% 8% 12% 24% 4.853434.71346 4.57971 4.451824.21236 3.99271 3.60478 2.74538 9.47130 8.98259 8.530208.11097 .360096.71008 5.65022 3.68186 13.86505 12.84926 11.93794 11.118399.71225 8.55948 6.81086 4.00129 18.04555 16.35143 14.87747 13.59033 11.46992 9.81815 7.46944 4.11026 22.0231619.52346 17.41315 13.76483 12.78336 10.67478 7.84314 414742 25.80771 22.39646 19.60044 17.29203 13.76483 11.25778 8.055184.16010 32.83469 27.35548 23.11477 19.79277 15.04630 11.92461 8.24378 4.16590 39.19612 31.42361 25.72976 21.48218 15.76186 12.23348 8.30450 4.16658 44.95504 34.76089 27.67556 22.62349 16.16143 12.37655 8.32405 4.16666 30 40 503910 60 GOGO2 Present Value of an Annuity Due of 1 1% 2% 3% 4% 6% 8% 12% 24% 4.90197 4.807734.717104 .629904.465114.312134 .03735 3.40428 9.56602 9.16224 8.78611 8.4353317.801697.24689 6.32825 4.56550 14.00370 13.10625 12.29607 11.56312 10.29498 9.24424 7.62817 4.96160 18.2260116.67846 14.32380 14.13394 12.15812 10.60360 8.36578 5.09672 22.24339 19.91393 17.93554 16.24696 13.55036 11.52876 8.784325.14281 26.06579 22.84438 20.18845 17.9837114.59072 12.158419.02181 5.15853 33.16303 27.90259 23.80822 20.58448|15.94907| 12.87858 9.23303 5.16657 39.58808 3205208 26.50166 22.34147 16.70757 13.21216 9.30104 5.16656 45.40459 35.45610 28.50583 23.52843 17:13111 13.36668 9.32294 5.16665 40 50 60
