Your company plans to issue bonds later in the upcoming year. But with the economic uncertainty and varied interest rates, it is not clear how much money the company will receive when the bonds are issued. The company is committed to issuing 2,000 bonds, each of which will have a face value of $1,000, a stated interest rate of 8 percent paid annually, and a period to maturity of 10 years. You may use any approach (tables, Excel, or financial calculator app) to calculate the bond proceeds; if you use the tables, choose the appropriate factors from the following link(s): (Euture Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1. Financial Calculator) Required: 1. Compute the bond issue proceeds assuming a market interest rate of 8 percent. Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value. 2. Compute the bond issue proceeds assuming a market interest rate of 7 percent. Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value. 3. Compute the bond issue proceeds assuming a market interest rate of 9 percent. Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value.
Your company plans to issue bonds later in the upcoming year. But with the economic uncertainty and varied interest rates, it is not clear how much money the company will receive when the bonds are issued. The company is committed to issuing 2,000 bonds, each of which will have a face value of $1,000, a stated interest rate of 8 percent paid annually, and a period to maturity of 10 years. You may use any approach (tables, Excel, or financial calculator app) to calculate the bond proceeds; if you use the tables, choose the appropriate factors from the following link(s): (Euture Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1. Financial Calculator) Required: 1. Compute the bond issue proceeds assuming a market interest rate of 8 percent. Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value. 2. Compute the bond issue proceeds assuming a market interest rate of 7 percent. Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value. 3. Compute the bond issue proceeds assuming a market interest rate of 9 percent. Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value.
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 17P
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Transcribed Image Text:Your company plans to issue bonds later in the upcoming year. But with the economic uncertainty and varied interest rates, it is not
clear how much money the company will receive when the bonds are issued. The company is committed to issuing 2,000 bonds, each
of which will have a face value of $1,000, a stated interest rate of 8 percent paid annually, and a period to maturity of 10 years. You may
use any approach (tables, Excel, or financial calculator app) to calculate the bond proceeds; if you use the tables, choose the
appropriate factors from the following link(s): (Euture Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity
of $1. Financial Calculator)
Required:
1. Compute the bond issue proceeds assuming a market interest rate of 8 percent. Also, express the bond issue price as a percentage
by comparing the total proceeds to the total face value.
2. Compute the bond issue proceeds assuming a market interest rate of 7 percent. Also, express the bond issue price as a percentage
by comparing the total proceeds to the total face value.
3. Compute the bond issue proceeds assuming a market interest rate of 9 percent. Also, express the bond issue price as a percentage
by comparing the total proceeds to the total face value.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Compute the bond issue proceeds assuming a market interest rate of 8 percent. Also, express the bond issue price as a
percentage by comparing the total proceeds to the total face value. (Round "Bond Issue Price as a Percentage" to 2 decimal
places.)
Present value of total proceeds from bond issue
Bond Issue Price as a Percentage of Face Value
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