calculate the present value of a $375,000 @ 5%, 5-year bond that pays $18,750 interest annually, if the market rate of interest is 10%. Round to the nearest dollar.
calculate the present value of a $375,000 @ 5%, 5-year bond that pays $18,750 interest annually, if the market rate of interest is 10%. Round to the nearest dollar.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 2PA: On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The...
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Question
Use the following tables to calculate the
Present Value of $1 | ¦ | Present Value of |
||||||||
Periods
|
5 %
|
6 %
|
7 %
|
10 %
|
¦ |
Periods
|
5 %
|
6 %
|
7 %
|
10 %
|
1
|
.95238
|
.94340
|
.93458
|
.90909
|
¦ |
1
|
.95238
|
.94340
|
.93458
|
.90909
|
2
|
.90703
|
.89000
|
.87344
|
.82645
|
¦ |
2
|
1.85941
|
1.83339
|
1.80802
|
1.73554
|
3
|
.86384
|
.83962
|
.81630
|
.75131
|
¦ |
3
|
2.72325
|
2.67301
|
2.62432
|
2.48685
|
4
|
.82270
|
.79209
|
.76290
|
.68301
|
¦ |
4
|
3.54595
|
3.46511
|
3.38721
|
3.16987
|
5
|
.78353
|
.74726
|
.71299
|
.62092
|
¦ |
5
|
4.32948
|
4.21236
|
4.10020
|
3.79079
|
6
|
.74622
|
.70496
|
.66634
|
.56447
|
¦ |
6
|
5.07569
|
4.91732
|
4.76654
|
4.35526
|
7
|
.71068
|
.66506
|
.62275
|
.51316
|
¦ |
7
|
5.78637
|
5.58238
|
5.38929
|
4.86842
|
8
|
.67684
|
.62741
|
.58201
|
.46651
|
¦ |
8
|
6.46321
|
6.20979
|
5.97130
|
5.33493
|
9
|
.64461
|
.59190
|
.54393
|
.42410
|
¦ |
9
|
7.10782
|
6.80169
|
6.51523
|
5.75902
|
10
|
.61391
|
.55839
|
.50835
|
.38554
|
¦ |
10
|
7.72173
|
7.36009
|
7.02358
|
6.14457
|
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