ce amount Present value of the semiannual interest payments
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 23E: Refer to 10.22. If the imputed interest rate is 6%, what is Anders Company residual income for the...
Related questions
Question
100%
Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes or No
5. Compute the price of $42,309,236 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.
| Present value of the face amount | |
| Present value of the semiannual interest payments | |
| Price received for the bonds |
Transcribed Image Text:Present Value of $1 at Compound Interest Due In n Perlods
Perlods
4.0%
4.5%
5%
5.5%
6%
6.5%
7%
1
0.96154
0.95694
0,95238
0.94787
0.94340
0.93897
0.93458
0.90703
0.86384
0.92456
0.91573
0.89845
0.89000
0.88166
0.87344
0.88900
0.87630
0.85161
0.83962
0.82785
0.81630
4.
0.85480
0.83856
0.82270
0.80722
0.79209
0.77732
0.76290
0.82193
0.80245
0.78353
0.76513
0.74726
0.72988
0.71299
0.72525
0.70496
0.68533
0.64351
0.60423
0.79031
0.76790
0.74622
0.66634
7
0.73483
0.75992
0.73069
0.71068
0.68744
0.65160
0.66506
0.62275
8
0.70319
0.67684
0.62741
0.58201
9
0.70259
0,67290
0.64461
0.61763
0.59190
0.56735
0.54393
10
0.67556
0.64393
0.61391
0.58543
0.55839
0.53273
0.50835
0.64958
0.62460
0.61620
0.58966
0,58468
0.55684
11
0.55491
0.52679
0.50021
0.47509
12
0.52598
0.49697
0.46968
0.44401
13
0.60057
0.56427
0.53032
0.49856
0.46884
0.44102
0.41496
0.50507
0.48102
14
0.57748
0.53997
0.47257
0.44230
0.41410
0.38782
15
0.55526
0.51672
0.44793
0.41727
0.38883
0.36245
0.33873
0.31657
16
0.53391
0.49447
0.45811
0.42458
0.39365
0.36510
17
0.51337
0.47318
0.43630
0.40245
0.37136
0.34281
0.45280
0.43330
0.49363
0.41552
0.32189
0.29586
0.27651
0.25842
18
0.38147
0.35034
19
0.47464
0.39573
0.36158
0.33051
0.30224
20
0.45639
0.41464
0.37689
0.34273
0.31180
0.28380
0.32486
0.30793
21
0.43883
0.39679
0.35894
0.29416
0.26648
0.24151
0.42196
0.37970
0.36335
22
0.34185
0.27751
0.25021
0.22571
23
0.40573
0.32557
0.29187
0.26180
0.23494
0.21095
0.39012
0.34770
0.31007
0.27666
0.24698
0.22060
0.19715
25
0.37512
0.33273
0.29530
0.26223
0.23300
0.20714
0.18425
26
0.36069
0.31840
0.28124
0.24856
0.21981
0.19450
0.17220
0.30469
0.29157
0.27902
0.26700
0.23560
0.22332
0.21168
0.20064
27
0.34682
0.26785
0.20737
0.18263
0.16093
0.25509
0.24295
28
0.33348
0.19563
0.17148
0.15040
0.32065
0.14056
0.13137
29
0.18456
0.16101
30
0.30832
0.23138
0.17411
0.15119
31
0.29646
0.25550
0.22036
0.19018
0.16425
0.14196
0.12277
0.24450
0.23397
0.22390
32
0.28506
0.20987
0.18027
0.15496
0.13329
0.11474
33
0.27409
0.19987
0.17087
0.14619
0.12516
0.10723
0.19035
0.16196
0.15352
34
0.26355
0.13791
0.11752
0.10022
35
0.25342
0.21425
0.18129
0.13011
0.11035
0.09366
40
0.20829
0.17193
0.14205
0.11746
0.09722
0.08054
0.06678
45
0.17120
0.13796
0.11130
0.08988
0.07265
0.05879
0.04761
50
0.14071
0.11071
0.08720
0.06877
0.05429
0.04291
0.03395
Present Value of $1 at Compound Interest Due in n Periods
Periods
8%
9%
10%
11%
12%
13%
14%
0.92593
0.91743
0.90909
0,90090
0.89286
0.88496
0.87719
2
0.85734
0.84168
0.82645
0.81162
0.79719
0.78315
0.76947
0.79383
0.77218
0.75131
0.73119
0.71178
0.69305
0.67497
4
0.73503
0.70843
0.68301
0.65873
0.63552
0.61332
0.59208
0.68058
0.64993
0.62092
0.59345
0.56743
0.54276
0.51937
0.63017
0.59627
0.56447
0.53464
0.50663
048032
0.45559
0.58349
0.54703
0.51316
0.48166
0.45235
0.42506
0.39964
8
0.54027
0.50187
0.46651
0.43393
040388
0.37616
0.35056
0.50025
0.46043
0.42410
0.39092
0.36061
0.33288
0.30751
10
0.46319
0.42241
0.38554
0.35218
0.32197
0.29459
0.26974
11
0.42888
0.38753
0.35049
0.31728
0.28748
0.26070
0.23662
12
0.39711
0.35553
0.31863
0.28584
0.25668
0.23071
0.20756
13
0.36770
0.32618
0.28966
0.25751
0.22917
0.20416
0.18207
14
0.34046
0.29925
0.26333
0.23199
0.20462
0.18068
0.15971
15
0.31524
0.27454
0.23939
0.20900
0.18270
0.15989
0.14010
16
0.29189
0.25187
0.21763
0.18829
0.16312
0.14150
0.12289
17
0.27027
0.23107
0.19784
0.16963
0.14564
0.12522
0.10780
18
0.25025
0.21199
0.17986
0.15282
0.13004
0.11081
0.09456
0.23171
0.21455
19
0.19449
0.16351
0.13768
0.11611
0.09806
0.08295
20
0.17843
0.14864
0.12403
0.10367
0.08678
0.07276
21
0.19866
0.16370
0.13513
0.11174
0.09256
0.07680
0.06383
22
0.18394
0.15018
0.12285
0.10067
0.08264
0.06796
0.05599
0.07379
0.06588
23
0.17032
0.13778
0.11168
0.09069
0.06014
0.04911
24
0.15770
0.12640
0.10153
0.08170
0.05323
0.04308
25
0.14602
0.11597
0.09230
0.07361
0.05882
0.04710
0.03779
26
0.13520
0.10639
0.08391
0.06631
0.05252
0.04168
0.03315
27
0.12519
0.09761
0.07628
0.05974
0.04689
0.03689
0.02908
28
0.11591
0.08955
0.06934
0.05382
0.04187
0.03264
0.02551
29
0.10733
0.08215
0.06304
0.04849
0.03738
0.02889
0.02237
30
0.09938
0.07537
0.05731
0.04368
0.03338
0.02557
0.01963
31
0.09202
0.06915
0.05210
0.03935
0.02980
0.02262
0.01722
32
0.08520
0.06344
0.04736
0.03545
0.02661
0.02002
0.01510
33
0.07889
0.05820
0.04306
0.03194
0.02376
0.01772
0.01325
34
0.07305
0.05339
0.03914
0.02878
0.02121
0.01568
0.01162
35
0.06763
0.04899
0.03558
0.02592
0.01894
0.01388
0.01019
40
0.04603
0.03184
0.02209
0.01538
0.01075
0.00753
0.00529
45
0.03133
0.02069
0.01372
0.00913
0.00610
0.00409
0.00275
50
0.02132
0.01345
0.00852
0.00542
0.00346
0.00222
0.00143
Present Value of Ordinary Annuity of $1 per Period
Periods
4.0%
4.5%
5%
5.5%
6%
6.5%
7%
0.95238
1.85941
0.94787
1.84632
0.93897
1.82063
1.
0.96154
0.95694
0.94340
0.93458
1.88609
1.87267
1.83339
1.80802
2.77509
2.74896
2.72325
2.69793
2.67301
2.64848
2.62432
4
3.62990
3.58753
3.54595
3.50515
346511
342580
3.38721
4.45182
4.38998
432948
4.27028
4.21236
4.15568
4.10020
6.
5.24214
5.15787
5.07569
4.99553
4.91732
4.84101
4.76654
6.00205
5.89270
5.78637
5.68297
5.58238
548452
5.38929
8.
6.73274
6.59589
646321
6.33457
6.20979
6.08875
5.97130
9
7.43533
7.26879
7.10782
6.95220
6.80169
6.65610
6.51523
10
8.11090
7.91272
7.72173
7.53763
7.36009
7.18883
7.02358
11
8.76048
8.52892
8.30641
8.09254
7.88687
7.68904
7.49867
12
9.38507
9.11858
8.86325
8.61852
8.38384
8.15873
7.94269
13
9.98565
9.68285
9.39357
9.11708
8.85268
8.59974
8.35765
14
10.56312
10.22283
9.89864
9.58965
9.29498
9.01384
8.74547
15
11.11839
10.73955
10.37966
10.03758
9.71225
940267
9.10791
16
11.65230
11.23402
10.83777
10.46216
10.10590
9.76776
9.44665
17
12.16567
11.70719
11.27407
10.86461
10.47726
10.11058
9.76322
11.24607
11.60765
12.65930
12.15999
11.68959
10.82760
10.43247
10.05909
19
13.13394
12.59329
12.08532
11.15812
10.73471
10.33560
20
13.59033
13.00794
1246221
11.95038
11.46992
11.01851
10.59401
21
14.02916
13.40472
12.82115
12.27524
11.76408
11.28498
10.83553
14.45112
13.78442
13.16300
12.58317
12.04158
11.53520
11.06124
14.85684
14.14777
1348857
12.87504
12.30338
11.77014
11.27219
15.24696
14.49548
13.79864
13.15170
12.55036
11.99074
11,46933
15.62208
14.82821
14.09394
13.41393
12.78336
12.19788
11.65358
15.98277
16.32959
13.66250
13.89810
11.82578
11.98671
26
15.14661
14.37519
13.00317
12.39237
14.64303
14.89813
27
15.45130
13.21053
12.57500
28
16.66306
15.74287
14.12142
13.40616
12.74648
12.13711
29
16.98371
16.02189
15.14107
14.33310
13.59072
12.90749
12.27767
30
17.29203
16.28889
15.37245
14.53375
13.76483
13.05868
12.40904
31
17.58849
16.54439
15.59281
14.72393
13.92909
13.20063
12.53181
32
17.87355
16.78889
15.80268
14.90420
14,08404
13.33393
12.64656
33
18.14765
17.02286
16.00255
15.07507
14.23023
1345909
12.75379
12.85401
12.94767
34
18.41120
17.24676
16.19290
15.23703
14.36814
13.57661
35
18.66461
17.46101
16.37419
15.39055
1449825
13.68696
40
19.79277
18.40158
17.15909
16.04612
15.04630
14.14553
13.33171
45
20.72004
19.15635
17.77407
16.54773
15.45583
14.48023
13.60552
50
21.48218
19.76201
18.25593
16.93152
15.76186
14.72452
13.80075
Present Value of Ordinary Annuity of $1 per Period
Periods
8%
9%
10%
11%
12%
13%
14%
0.92593
0.91743
0.90909
0.90090
0.89286
0.88496
0.87719
2
1.78326
1.75911
1.73554
1.71252
1.69005
1.66810
1.64666
2.57710
2.53129
2.48685
2.44371
2.40183
2.36115
2.32163
3.31213
3.23972
3.16987
3.10245
3.03735
2.97447
2.91371
3.99271
3.88965
3.79079
3.69590
3.60478
3.51723
3.43308
4.62288
4.48592
4.35526
4.23054
4.11141
3.99755
3.88867
5.20637
5.03295
4.86842
4.71220
4.56376
4.42261
4.28830
8
5.74664
5.53482
5.33493
5.14612
4.96764
4.79677
4.63886
6.24689
5.99525
5.75902
5.53705
5.32825
5.13166
4.94637
10
6.71008
6.41766
6.14457
5.88923
5.65022
5.42624
5.21612
11
7.13896
6.80519
6.49506
6.20652
5.93770
5.68694
5.45273
12
7.53608
7.16073
6.81369
6.49236
6.19437
5.91765
5.66029
13
7.90378
7.48690
7.10336
6.74987
6.42355
6.12181
5.84236
14
8.22424
7.78615
7.36669
6.96187
6.62817
6.30249
6.00207
15
8.55948
8.06069
7.60608
7.19087
6.81086
6.46238
6.14217
16
8.85137
8.31256
7.82371
7.37916
6.97399
6.60388
6.26506
17
9.12164
8.54363
8.02155
7.54879
7.11963
6.72909
6.37286
18
9.37189
8.75563
8.20141
7.70162
7.24967
6.83991
6.46742
19
9.60360
8.95011
8.36492
7.83929
7.36578
6.93797
6.55037
20
9.81815
9.12855
8.51356
7.96333
7.46944
7.02475
6.62313
21
10.01680
9.29224
8.64869
8.07507
756200
7.10155
6.68696
22
10.20074
9.44243
8.77154
8.17574
7.64465
7.16951
6.74294
23
10.37106
9.58021
8.88322
8.26643
7.71843
7.22966
6.79206
24
10.52876
9.70661
8.98474
8.34814
7.78432
7.28288
6.83514
25
10.67478
9.82258
9.07704
8.42174
7.84314
7.32998
6.87293
26
10.80998
9.92897
9.16095
8.48806
7.89566
7.37167
6.90608
27
10.93516
10.02658
9.23722
8.54780
7.94255
7.40856
6.93515
28
11.05108
10.11613
9.30657
8.60162
7.98442
7.44120
6.96066
29
11.15841
10.19828
9.36961
8.65011
8.02181
747009
6.98304
30
11.25778
10.27365
9.42691
8.69379
8.05518
7.49565
7.00266
31
11.34980
10.34280
9.47901
8.73315
8.08499
7.51828
7.01988
32
11.43500
10.40624
9.52638
8.76860
8.11159
7.53830
7.03498
33
1151389
10.46444
9.56943
8.80054
8.13535
7.55602
7.04823
34
11.58693
10.51784
9.60857
8.82932
8.15656
7.57170
7.05985
35
11.65457
10.56682
9.64416
8.85524
8.17550
7.58557
7.07005
40
11.92461
10.75736
9.77905
8.95105
8.24378
7.63438
7.10504
45
12.10840
10.88120
9.86281
9.00791
8.28252
7.66086
7.12322
50
12.23348
10.96168
9.91481
9.04165
8.30450
7.67524
7.13266
Transcribed Image Text:4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
5. Compute the price of $42,309,236 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.
Present value of the face amount
Present value of the semiannual interest payments
Price received for the bonds
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