Calculate the present value of the face amount


Selling price of bond

APPLY THE CONCEPTS: Calculate the selling price of a bond

Bond indenture

Issue Date: 1/1/2011

Face value: $100,000

Coupon Rate of Interest: 6% annually

Maturity date: 12/31/2013

Additional information

• The market interest rate for bonds of similar risk is 8%.

• Interest is paid out on an annual basis.

• The market price of the bond has yet to be determined.

Part 1: Calculate the present value of the face amount to be received at maturity.

Part 2: Calculate the present value of the interest payments to be paid out periodically

Part 3: Add the figures calculated in parts 1 and 2 together.

Solution Preview :

Prepared by a verified Expert
Other Management: Calculate the present value of the face amount
Reference No:- TGS01773170

Now Priced at $25 (50% Discount)

Recommended (98%)

Rated (4.3/5)