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maks197457 [2]
3 years ago
9

Sharmer Company issues 5%, 5-year bonds with a par value of $1,000,000 and semiannual interest payments. On the issue date, the

annual market rate for these bonds is 6%. What is the bond's issue (selling) price, assuming the following factors: n= i= Present Value of an Annuity Present value of $1 5 5 % 4.3295 0.7835 10 3 % 8.7521 0.7812 5 6 % 4.2124 0.7473 10 3 % 8.5302 0.7441
Business
1 answer:
nexus9112 [7]3 years ago
5 0

Answer:

$957,349

Explanation:

the market price of the bonds = PV of face value + PV of coupon payments

PV of face value = $1,000,000 / (1.03)¹⁰ = $744,094

PV of coupon payments = $25,000 x 8.5302 (PV annuity factor, 3%, 10 periods) = $213,255

market price of the bonds = $744,094 + $213,255 = $957,349

journal entry to record the issuance of the bonds:

Dr Cash 957,349

Dr Discount on bonds payable 42,651

    Cr Bonds payable 1,000,000

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During what meeting did the delegates request each state write a constitution?
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3 years ago
You own 200 shares of Loner stock. The firm announced that it will be issuing a dividend of $.20 a share one year from today fol
nikklg [1K]

Answer:

value of your total investment income   362.80

Explanation:

The computation of the value of your total investment income in two years is shown below

Value of Dividend after 2 years (200 × .20 × 1.07)42.80

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value of your total investment income   362.80

7 0
2 years ago
You deposit​ $5,000 per year at the end of each of the next 25 years into an account that pays​ 8% compounded annually. How much
Volgvan

Answer:

The correct answer is A. $18,276

Explanation:

First you have to calculate how much you'd end up having at the end of the 25 years period in your savings account.

You calculate the total amount saved for each year, using the formula:

S_{n} = S_{n-1} *(1+r)+D

Where

S_{n} is the total amount in the savings account for this period.

S_{n-1} is the total amount in the savings account from the previous period.

ris the interest rate.

Dare the annual deposits being made into the savings account.

Therefore for the first year you'd do:

S_{1} = S_{0} *(1+r)+D

S_{1} = 0*(1+0.08)+5000=5000

For the second year:

S_{2} = S_{1} *(1+r)+D

S_{2} = 5000*(1+0.08)+5000=10400

And so on. You can help yourself calculate the value of this series using programs like Excel.

I have attached an Excel file that has a table with the savings values for each of the 25 years.

So, the 25th year you’ll have $365,529.70 in your savings account. Now you simply divide this number by 20 (that will be the number of years you’ll be withdrawing the same dollar amount from your savings account):

Withdrawals = 365,529.70/20=18,276.485

In conclusion, you’d be able to withdraw $18,276.485 each year for the following 20 years after the 25th deposit, if all withdrawals are the same dollar amount.

Download xlsx
3 0
3 years ago
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