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  • 5-2 Present Value of Bonds Issued

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    Nil Donduran
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    6 views1 page

    5-2 Present Value of Bonds Issued

    Uploaded by

    Nil Donduran

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Present Value of Bonds Issued = C PVIFA ( i%, n) + M PVIF ( i%, n)

    Par Value of Bonds (M) = $1.000.000


    Coupon (C) = $1.000.000 10% 2 = $ 50.000
    Maturity (t) = 10 years
    Periods (n) = 10 years2 times in each = 20 times
    Required Rate of Return (r) = 14% annually
    Discount Factor (i) = 14%2 = 7% for semi-annual payments
    PV of Bonds Issued = $50.000 PVIFA ( 7%, 20) + $1.000.000 PVIF (7%,20)
    PV of Bonds Issued = $50.000 10,5944 + $1.000.000 0,2584 = $788.120

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