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ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%.  They will mature in 10 years.  Interest will be paid semiannually.  At the date of issuance, compute the present value (bond issue price) of the future cash flows.

ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%.  They will mature in 10 years.  Interest will be paid semiannually.  At the date of issuance, compute the present value (bond issue price) of the future cash flows.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...
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ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%.  They will mature in 10 years.  Interest will be paid semiannually.  At the date of issuance, compute the present value (bond issue price) of the future cash flows.  Following are appropriate factors from tables:

ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%. They will mature in 10 years. Interest will be paid semiannually. At the date of issuance, compute the present value (bond issue price) of the future cash flows. Following are appropriate factors from tables: Table Present Value of $1 Present Value of % n 38554 .32197 .37689 .31180 10%/10 12%/10 5%/20 6%/20 Required Computation: ordinary annuity of $1 6.14457 5.65022 12.46221 11.46992
Transcribed Image Text:ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%. They will mature in 10 years. Interest will be paid semiannually. At the date of issuance, compute the present value (bond issue price) of the future cash flows. Following are appropriate factors from tables: Table Present Value of $1 Present Value of % n 38554 .32197 .37689 .31180 10%/10 12%/10 5%/20 6%/20 Required Computation: ordinary annuity of $1 6.14457 5.65022 12.46221 11.46992
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