On January 1, 2018, Frontier World issues $40.8 million of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride.
1-a. If the market rate is 6%, calculate the issue price
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| | | Bond Characteristics | Amount | | Face amount | $40,800,000 | | Interest payment | | | Market interest rate | | | Periods to maturity | | | Issue price | |
2-a. If the market rate is 7%, calculate the issue price.
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| | | Bond Characteristics | Amount | | Face amount | $40,800,000 | | Interest payment | | | Market interest rate | | | Periods to maturity | | | Issue price | |
3-a. If the market rate is 8%, calculate the issue price.
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| | | Bond Characteristics | Amount | | Face amount | $40,800,000 | | Interest payment | | | Market interest rate | | | Periods to maturity | | | Issue price | | |
TABLE 1 Future Value of $1 FV $1 (1 i) 1.5% n/i 5.5% 11.01000 1.01500 1.02000 1.02500 1.03000 1.03500 1.04000 1.04500 1.05000 1.05500 1.06000 1.07000 1.08000 1.09000 1.10000 .11000 1.12000 .13000 2 1.02010 1.03022 1.04040 1.05063 1.06090 1.07123 1.08160 1.09203 1.10250 1.11303 1.12360 1.14490 .16640 1.18810 1.21000 1.23210 1.25440 127690 3 1.03030 1.04568 1.06121 1.07689 1.09273 1.10872 1.12486 1.14117 1.15763 1.17424 .19102 1.22504 1.25971 1.29503 1.33100 36763 1.40493 144290 4 1.04060 1.06136 1.08243 1.10381 1.12551 1.14752 1.16986 1.19252 1.21551 1.23882 1.26248 1.31080 36049 1.41158 1.46410 1.51807 1.57352 1.63047 5 1.05101 1.07728 1.10408 1.13141 1.15927 1.18769 1.21665 1.24618 1.27628 1.30696 1.33823 1.40255 1.46933 1.53862 1.61051 1.68506 1.76234 1.84244 1.0% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 6 1.06152 1.09344 1.12616 1.15969 1.19405 1.22926 1.26532 1.30226 1.34010 1.37984 1.41852 1.50073 1.59687 1.67710 1.77156 1.87041 1.97382 2.08195 1.07214 1.10984 1.14869 1.18869 1.22987 1.27228 1.31593 1.36086 1.40710 1.45468 1.50363 1.60578 1.71382 1.82804 1.94872 2.07616 2.21068 2.35261 8 1.08286 1.12649 1.17166 1.21840 1.26677 1.31681 1.36857 1.42210 147746 1.53469 1.59385 1.71819 1.85093 1.99256 2.14359 2.30454 247596 2.65844 1.09369 1.14339 1.19509 1.24886 1.30477 1.36290 1.42331 1.48610 1.55133 1.61909 1.68948 1.83846 .99900 2.17189 2.35795 2.55804 2.77308 3.00404 10 1.10462 1.16054 1.21899 1.28008 1.34392 1.41060 1.48024 1.55297 1.62889 1.70814 1.79085 1.96715 2.15892 2.36736 2.59374 2.83942 3.10585 3.39457 11 1.11567 1.17795 1.24337 1.31209 1.38423 1.45997 1.53945 1.62285 1.71034 1.80209 1.89830 2.10485 2.33164 2.58043 285312 3.15176 347855 3.83586 12 1.12683 1.19562 1.26824 1.34489 1.42576 1.51107 1.60103 1.69588 1.7956 1.90121 2.01220 2.25219 2.51817 2.81266 3.13843 3.49845 3.89598 4.33452 13 1.13809 1.21355 1.29361 1.37851 146853 1.56396 1.66507 1.77220 188565 2.00577 2.13293 2.40985 2.71962 3.06580 3.45227 3.88328 4.36349 4.89801 14 1.14947 1.23176 1.31948 1.41297 1.51259 1.61869 1.73168 1.85194 1.97993 2.11609 2.26090 2.57853 2.93719 3.34173 3.79750 4.31044 4.887115.53475 15 1.16097 1.25023 1.34587 1.44830 1.55797 1.67535 1.80094 1.93528 2.07893 2.23248 2.39656 2.75903 3.17217 3.64248 4.17725 4.78459 5.47357 6.25427 16 1.17258 1.26899 1.37279 1.48451 1.60471 1.73399 1.87298 2.02237 2.18287 2.35526 2.54035 2.95216 3.42594 3.97031 4.594975.31089 6.13039 7.06733 17 1.18430 1.28802 1.40024 1.52162 1.65285 1.79468 1.94790 2.11338 2.29202 2.48480 2.69277 3.15882 3.70002 4.32763 5.05447 5.89509 6.86604 7.98608 18 1.19615 1.30734 1.42825 1.55966 1.70243 1.85749 2.02582 2.20848 2.40662 2.62147 2.85434 3.37993 3.99602 4.71712 5.55992 6.54355 7.68997 9.02427 19 1.20811 1.32695 1.45681 1.59865 1.75351 1.92250 2.10685 2.30786 2.52695 2.76565 3.02560 3.61653 4.31570 5.14166 6.11591 7.26334 8.61276 10.19742 20 1.22019 1.34686 1.48595 1.63862 1.80611 1.98979 2.19112 2.41171 2.65330 2.91776 3.20714 3.86968 4.66096 5.60441 6.72750 8.06231 9.64629 11.52309 21 1.23239 1.36706 1.51567 1.67958 186029 2.05943 2.27877 2.52024 2.78596 3.07823 3.39956 4.14056 5.03383 6.10881 7.40025 8.94917 10.80385 13.02109 22 1.24472 1.38756 1.54598 1.72157 1.91610 2.13151 2.36992 2.63365 2.92526 3.24754 3.60354 4.43040 5.43654 6.65860 8.14027 9.93357 12.10031 14.71383 23 1.25716 1.40838 1.57690 1.76461 1.97359 2.20611 2.46472 2.75217 3.07152 3.42615 3.81975 4.74053 5.871467.25787 8.95430 11.02627 13.55235 16.62663 24 1.26973 1.42950 1.60844 1.80873 2.03279 2.28333 2.56330 2.87601 3.22510 3.61459 4.04893 5.07237 6.34118 7.91108 9.84973 12.23916 15.17863 18.78809 25 1.28243 1.45095 1.64061 1.85394 2.09378 2.36324 2.66584 3.00543 3.38635 3.81339 4.29187 5.42743 6.84848 8.62308 10.83471 13.58546 17.00006 21.23054 30 1.34785 1.56308 1.81136 2.09757 2.42726 2.80679 3.24340 3.74532 4.32194 4.98395 5.74349 7.61226 10.06266 13.26768 17.44940 22.89230 29.95992 39.11590 35 1.41660 1.68388 1.99989 2.37321 2.81386 3.33359 3.94609 4.66735 5.51602 6.51383 7.68609 10.67658 14.78534 20.41397 28.10244 38.57485 52.79962 72.06851 40 1.48886 1.81402 2.20804 2.68506 3.26204 3.95926 4.80102 5.81636 7.03999 8.51331 10.28572 14.97446 21.72452 31.40942 45.25926 65.00087 93.05097 132.78155 45 1.56481 1.95421 2.43785 3.03790 3.78160 4.70236 5.84118 7.24825 8.98501 11.12655 13.76461 21.00245 31.92045 48.32729 72.89048 109.53024 163.98760 244.64140 50 1.64463 2.10524 2.69159 3.43711 4.38391 5.58493 7.10668 9.03264 11.46740 14.54196 18.42015 29.45703 46.90161 74.35752 117.39085 184.56483 289.00219 450.73593
