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    Lovelylatin15's Avatar
    Lovelylatin15 Posts: 1, Reputation: 1
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    #1

    Apr 1, 2007, 06:25 PM
    Compute the price of bonds on their issue date
    Can you help please?

    On Jan 1 a company issues bonds with a par value of $300,000. The bonds mature in 5 years and pay 8% annual interest each June 30 and Dec 31. On the issue date, the market rate of interest is 6%. Compute the price of the bonds on the issue date. The following information is taken from present value tables:

    Present Value of annuity for 10 periods at 3%... 8.5302
    Present Value of annuity for 10 periods at 4%... 8.1109
    Pressent value of 1 due in 10 periods at 3%... 0.7441
    Pressent value of 1 due in 10 periods at 4%... 0.6756
    piss1ant's Avatar
    piss1ant Posts: 9, Reputation: 1
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    #2

    Jun 20, 2010, 02:39 PM
    Can you help please?

    On Jan 1 a company issues bonds with a par value of $300,000. The bonds mature in 5 years and pay 8% annual interest each June 30 and Dec 31. On the issue date, the market rate of interest is 6%. Compute the price of the bonds on the issue date. The following information is taken from present value tables:

    Present Value of annuity for 10 periods at 3%... 8.5302
    Present Value of annuity for 10 periods at 4%... 8.1109
    Pressent value of 1 due in 10 periods at 3%... 0.7441
    Pressent value of 1 due in 10 periods at 4%... 0.6756
    dom.b.fortin's Avatar
    dom.b.fortin Posts: 27, Reputation: 1
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    #3

    Jul 6, 2011, 08:03 PM
    Interest: (300,000*.04)*8.5302 = 102,362.40
    Principal: 300,000*.7441 = 223,230.00
    Bond Price: Interest + Principal = 325,592.40
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