Other ACC 308 Week 6 Chapter 14 Homework graded A ACC 308 Week 6 Chapter 14 Homework graded A Bond Issue On January 1, Canglon, Inc., issues 10%, 5-year bonds with a face value of $150,000 when the effective rate is 12%. Interest is to be paid semiannuall
Other ACC 308 Week 6 Chapter 14 Homework graded A ACC 308 Week 6 Chapter 14 Homework graded A Bond Issue On January 1, Canglon, Inc., issues 10%, 5-year bonds with a face value of $150,000 when the effective rate is 12%. Interest is to be paid semiannually. Prepare calculations to prove that the selling price of the bonds is $138,959.90. Click here to access the tables to use with this exercise. Round your answers to two decimal places, if necessary. Present value of principa l: $83,759.2 5 Present value of interest: 55200.65 Selling price $.9 0 5-year bonds x 2 periods = 10 semiannual periods Feedback You should determine the selling price by using the effective rate to determine the present value of both the future principal and periodic interest payments. When interest is paid semiannually, you should divide the effective rate by the interest periods per year to determine the effective rate per semiannual period (for example, 12% ÷ 2 periods = 6% semiannual rate). You should also express the time to maturity in semiannual periods (for example, 5 year bonds × 2 periods = 10 semiannual periods. You should use the same number of interest periods for both principal and interest calculations. Present value
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