Question
The following financial calculations were covered in the competency content. Calculate the following problem showing formulas for the ratio as well as the answer. Include
The following financial calculations were covered in the competency content. Calculate the following problem showing formulas for the ratio as well as the answer. Include the calculations, computation details (show your work), and answers. Word, Excel, or .pdf format preferred.
Problem #3 Company A issues twenty-year bond with a face value of $300,000 on January 1, Year One. According to the bond contract, cash interest at a stated rate of 2 percent will be paid each year beginning December 31, Year One. Company B wants to buy this bond immediately at an annual interest rate of 8 percent. The present value of $1 in twenty years at a rate of 8 percent is 0.215. The present value of an ordinary annuity of $1 per year for twenty years at a rate of 8 percent per year is 9.818. How much does Idea Investment Company pay the Vertise Company for this bond (rounded)? Ensure to include the following calculations: cash interest, present value of cash interest, present value of the bond, and value of bond. Show work for all calculations and clearly mark answer.
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