You are called Iin as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual Interest rate of 9 percent, which is pald semiannually. The yleld to maturity on the bonds is 12 percent annual Interest. There are 10 years to maturity. Use AgpendixB and Apoendix D for an appraximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the price of the bonds based on semannual analysis. (Do not round Intermedlate calculetions. Round your finel answer to 2 decimal pleces.) Bond price 827 05 b. With 5 years to maturity, if yield to maturity goes down substansally to 10 percent wnat w be the new price of the bonas? (Do not round Intermediete calculetions. Round your final answer to 2 decinal places) New bond price

You are called Iin as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual Interest rate of 9 percent, which is pald semiannually. The yleld to maturity on the bonds is 12 percent annual Interest. There are 10 years to maturity. Use AgpendixB and Apoendix D for an appraximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the price of the bonds based on semannual analysis. (Do not round Intermedlate calculetions. Round your finel answer to 2 decimal pleces.) Bond price 827 05 b. With 5 years to maturity, if yield to maturity goes down substansally to 10 percent wnat w be the new price of the bonas? (Do not round Intermediete calculetions. Round your final answer to 2 decinal places) New bond price

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.3E: Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8%...

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Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments 500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments 800 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments 2,000 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments Required Assuming the market rate of interest is 10%, calculate the selling price for each bond issue.