Question
the total face value of these bonds is $1,000,000 and they bear interest at 8% payable semi-annually on December 31 and June 30.The market rate
the total face value of these bonds is $1,000,000 and they bear interest at 8% payable semi-annually on December 31 and June 30.The market rate of interest for this similar bond is 10%.The bonds have a term of 10 years and were issued on January 1, 2017 which is the date noted on the face value of the bond.
Required:
Part A (4 MARKS):What is the present value of this bond issue?
Part B (4 MARKS): What would the present value of the bonds be if the market rate of interest was 6% instead?
Assuming the same facts:The Solar Power Equipment Sales Company has decided to fund its new solar project with a bond issue.The total face value of these bonds is $1,000,000 and they bear interest at 8% payable semi-annually on January 1st and July 1st.The market rate of interest for this similar bond is 10%.The bonds have a term of 10 years and were issued on January 1, 2017 which is the date noted on the face value of the bond.
Part C (4 MARKS):What is the present value of the bond issued?
Part D (4 MARKS):What would the present value of the bonds be if market rate of interest was 6% instead?
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Accounting Best Practices
Authors: Steven M Bragg
7th Edition
1118404149, 9781118404140
