Problem
Simpson Inc. purchased 5, $4,000, 11% bonds of HillsdaleCorporation when the market rate of interest was 10%. Interest ispaid semiannually on the bonds, and the bonds mature in 4 years.
Instructions:
Compute the total price paid by Simpson Inc. for thebonds showing your calculation for the present value of theprincipal and the present value of the interest payments.
NOTE: Be sure you review the PV Tables completely to ensure you find thecorrect period and interest rate for the calculation.