Question
On January 2, 20X1, the jackson Company, Inc., a privately held company, issued $2,000,000, 5-year, 10% term bonds, dated January 2, 20X1. The bonds provided
On January 2, 20X1, the jackson Company, Inc., a privately held company, issued $2,000,000, 5-year, 10% term bonds, dated January 2, 20X1. The bonds provided for semiannual interest payments to be made on June 30 and December 31 of each year. Terms of the bond indenture allowed the company to call the bonds at 102 after 1 year. The bonds were issued when the market interest rate was 8%.
Summary facts:
Face of bonds: 2,000,000
Stated rate of interest: 10% per year
Market rate of Interest: 8% per year
Terms of bonds: 5 years
Compute the price of the bonds using formulas embedded into the cells of the table below.
#of Effective Payment Which Time Value of Value Money Present Compounding Interest Amoun TVM Table? (Select Factor from Dropdown decimal box) Periods Rate per Period (%) Round to 2 places) Face of the Bonds Periodic Interest Payments Price of the Bonds
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