Problem
On January 1, 2001, Sandstone Corporation purchased $200,000 face value, 9%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2011, and pay interest annually beginning January 1, 2002. The market rate of interest is 11%. How much did Sandstone pay for the bonds?
11% Interest Table Factors
|
Period
|
Present Value of $1
(Table 6-2)
|
Present Value of an Ordinary Annuity of $1 (Table 6-4)
|
|
6
|
.53464
|
4.23054
|
|
7
|
.48166
|
4.71220
|
|
8
|
.43393
|
5.14612
|
|
9
|
.39092
|
5.53705
|
|
10
|
.35218
|
5.88923
|