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On January 1, 2016, Masterwear Industries issued $700,000 of 12% bonds, dated January 1. Interest of $42,000 is payable semiannually on June 30 and December
On January 1, 2016, Masterwear Industries issued $700,000 of 12% bonds, dated January 1. Interest of $42,000 is payable semiannually on June 30 and December 31. The bonds mature in three years. The market yield for bonds of similar risk and maturity is 10%. The entire bond issue was purchased by United Intergroup, Inc.
i=5,n=6,pmt=42,000, fv=700,000. Then I got PV=735,529.84 ,
I can not get 735,533
LO14-2 Illustration: Bonds Sold at a Premium When bonds sell for more than their face amount On January 1, 2016, Masterwear Industries issued $700,000 of 12% bonds, dated January 1, Interest of $42,000 is payable semiannually on June 30 and December 31. The bonds mature in three years. The market yield for bonds of similar risk and maturity is 10%. The entire bond issue was purchased by United Intergroup, Inc. Calculation of the price of the bonds Present Values Interest Principal $42,0005.07569= $700,000 0.74622 $213,179 522,354 $735,533 Present value (price) of the bonds Present value of an ordinary annuity of $1: n-6, 1-5% Present value of $1: n-6, 5%Step by Step Solution
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