January 1, 2012 Kristy Corp is issuing 400,000 of 10% 3-year bonds with semiannual interest payments. Potential bond investors want a rate of 8% interest (market Rate).
14 AE10- 17 PV Bond B Kristy Assignment 400k 8% Prem Video XX
https://www.youtube.com/watch?v=PdoWQSF3-Ug&feature=youtu.be
Compute the market price (present value) of the bonds and the "Closing Price % of Face".
Calculate Present value of Bond payment at maturity: A
Caculate Present value of bi-annual Interest Payments:B
Market price (present value) of bonds = A+B
Journalize the issuance of the Bonds with a proper explanation which includes all info needed for someone to calculate the market value
Present Value of 1
|
|
3.0%
|
3.5%
|
4.0%
|
4.5%
|
5.0%
|
5.5%
|
6.0%
|
6.5%
|
7.0%
|
7.5%
|
8.0%
|
8.5%
|
9.0%
|
9.5%
|
10.0%
|
|
1
|
0.97087
|
0.96618
|
0.96154
|
0.95694
|
0.95238
|
0.94787
|
0.94340
|
0.93897
|
0.93458
|
0.93023
|
0.92593
|
0.92166
|
0.91743
|
0.91324
|
0.90909
|
|
2
|
0.94260
|
0.93351
|
0.92456
|
0.91573
|
0.90703
|
0.89845
|
0.89000
|
0.88166
|
0.87344
|
0.86533
|
0.85734
|
0.84946
|
0.84168
|
0.83401
|
0.82645
|
|
3
|
0.91514
|
0.90194
|
0.88900
|
0.87630
|
0.86384
|
0.85161
|
0.83962
|
0.82785
|
0.81630
|
0.80496
|
0.79383
|
0.78291
|
0.77218
|
0.76165
|
0.75131
|
|
4
|
0.88849
|
0.87144
|
0.85480
|
0.83856
|
0.82270
|
0.80722
|
0.79209
|
0.77732
|
0.76290
|
0.74880
|
0.73503
|
0.72157
|
0.70843
|
0.69557
|
0.68301
|
|
|
|
5
|
0.86261
|
0.84197
|
0.82193
|
0.80245
|
0.78353
|
0.76513
|
0.74726
|
0.72988
|
0.71299
|
0.69656
|
0.68058
|
0.66505
|
0.64993
|
0.63523
|
0.62092
|
|
6
|
0.83748
|
0.81350
|
0.79031
|
0.76790
|
0.74622
|
0.72525
|
0.70496
|
0.68533
|
0.66634
|
0.64796
|
0.63017
|
0.61295
|
0.59627
|
0.58012
|
0.56447
|
|
7
|
0.81309
|
0.78599
|
0.75992
|
0.73483
|
0.71068
|
0.68744
|
0.66506
|
0.64351
|
0.62275
|
0.60275
|
0.58349
|
0.56493
|
0.54703
|
0.52979
|
0.51316
|
|
8
|
0.78941
|
0.75941
|
0.73069
|
0.70319
|
0.67684
|
0.65160
|
0.62741
|
0.60423
|
0.58201
|
0.56070
|
0.54027
|
0.52067
|
0.50187
|
0.48382
|
0.46651
|
|
9
|
0.76642
|
0.73373
|
0.70259
|
0.67290
|
0.64461
|
0.61763
|
0.59190
|
0.56735
|
0.54393
|
0.52158
|
0.50025
|
0.47988
|
0.46043
|
0.44185
|
0.42410
|
|
10
|
0.74409
|
0.70892
|
0.67556
|
0.64393
|
0.61391
|
0.58543
|
0.55839
|
0.53273
|
0.50835
|
0.48519
|
0.46319
|
0.44229
|
0.42241
|
0.40351
|
0.38554
|
Present Value of an Annuity of 1
|
|
3.0%
|
3.5%
|
4.0%
|
4.5%
|
5.0%
|
5.5%
|
6.0%
|
6.5%
|
7.0%
|
7.5%
|
8.0%
|
8.5%
|
9.0%
|
9.5%
|
10.0%
|
|
1
|
0.97087
|
0.96618
|
0.96154
|
0.95694
|
0.95238
|
0.94787
|
0.94340
|
0.93897
|
0.93458
|
0.93023
|
0.92593
|
0.92166
|
0.91743
|
0.91324
|
0.90909
|
|
2
|
1.91347
|
1.89969
|
1.88609
|
1.87267
|
1.85941
|
1.84632
|
1.83339
|
1.82063
|
1.80802
|
1.79557
|
1.78326
|
1.77111
|
1.75911
|
1.74725
|
1.73554
|
|
3
|
2.82861
|
2.80164
|
2.77509
|
2.74896
|
2.72325
|
2.69793
|
2.67301
|
2.64848
|
2.62432
|
2.60053
|
2.57710
|
2.55402
|
2.53129
|
2.50891
|
2.48685
|
|
4
|
3.71710
|
3.67308
|
3.62990
|
3.58753
|
3.54595
|
3.50515
|
3.46511
|
3.42580
|
3.38721
|
3.34933
|
3.31213
|
3.27560
|
3.23972
|
3.20448
|
3.16987
|
|
5
|
4.57971
|
4.51505
|
4.45182
|
4.38998
|
4.32948
|
4.27028
|
4.21236
|
4.15568
|
4.10020
|
4.04588
|
3.99271
|
3.94064
|
3.88965
|
3.83971
|
3.79079
|
|
6
|
5.41719
|
5.32855
|
5.24214
|
5.15787
|
5.07569
|
4.99553
|
4.91732
|
4.84101
|
4.76654
|
4.69385
|
4.62288
|
4.55359
|
4.48592
|
4.41983
|
4.35526
|
|
7
|
6.23028
|
6.11454
|
6.00205
|
5.89270
|
5.78637
|
5.68297
|
5.58238
|
5.48452
|
5.38929
|
5.29660
|
5.20637
|
5.11851
|
5.03295
|
4.94961
|
4.86842
|
|
8
|
7.01969
|
6.87396
|
6.73274
|
6.59589
|
6.46321
|
6.33457
|
6.20979
|
6.08875
|
5.97130
|
5.85730
|
5.74664
|
5.63918
|
5.53482
|
5.43344
|
5.33493
|
|
9
|
7.78611
|
7.60769
|
7.43533
|
7.26879
|
7.10782
|
6.95220
|
6.80169
|
6.65610
|
6.51523
|
6.37889
|
6.24689
|
6.11906
|
5.99525
|
5.87528
|
5.75902
|
|
10
|
8.53020
|
8.31661
|
8.11090
|
7.91272
|
7.72173
|
7.53763
|
7.36009
|
7.18883
|
7.02358
|
6.86408
|
6.71008
|
6.56135
|
6.41766
|
6.27880
|
6.14457
|