B

Par Value of Bond

Time
Coupon Rate
Required Return
PMT

1000
20
8%
9%
80

Bond Price
Number of Bonds Issued

40
4%
4.50%
40
$907.99
10000

Total Collected

$9,079,921

C
Coupon Payments as of
2006
2007

15
17

PV of Long-term Debt
2006 $
2007 $

D
Coupon Payments Remaining
PV (6% MV Rate)
Current Market Value Per Bond

$
$

9,258,590
9,292,611

21
11,541,502
1,154.15

Cash Flows
PV of Market Value
Proceeds from Issue
Company Cash

$
$
$

Current Year Earnings

Coupon Payments as of 2008
PV (2008)
$
Gain (Loss) on Retirement

New Bond Issue

Proceeds of Issue
$
Par Value
$
Number of Bonds

11,541,502
10,000,000
1,541,502

19
9,329,764
(2,211,739)

11,541,502
1,000
11,542

8% Bond
6% Bond
Cash Funding
Total 6% Funding
Difference

$11,541,502
$ 10,000,000
$ 1,541,502
$ 11,541,502
$0.00