[Anonymous]

Can anyone tell me how to find the selling price of a bond?

Face Value: $400,000 bonds at 6%

Effective (Market) Rate: 8%

Interest paid semi-annual

Ten Year bonds

Present Value OA of $1

5 Periods: 3%: 4.5797 4%:4.518 6%: 4.2124 8%: 3.9927

10 Periods: 3%: 8.5302 4%: 8.1109 6%: 7.3601 8%: 6.7101

Present Value of $1

5 Periods: 3%: .8626 4%: .8219 6%: .7473 8%: .6606

10 Periods: 3%: .7441 4%: .6756 6%: .5584 8%:.4632

[Anonymous]

Humpty Bump

[Zhaba]

How far into the period of 10 years have you bought the bonds? Don't we need to use the rate for 20 periods, if bought at inception?

[Anonymous]

Bonds are bought at inception.

PV OA $1

20 Periods:

3%: 14.8775 4%: 13.5903 6%: 11.4699 8%: 9.8181

PV of $1

20Periods

3% .5537 4%: .4564 6%: .3118 8%: .2145

Sorry about that.

[Zhaba]

I get 345,639 or 345, 644. I think due to rounding doing it both with financial calculator and manually (still with calculator).

[stoleway]

($400,000 x 6%) x 6.7101= $161,042.4

400,000 x. 4632 = $185,280

Answer =$346,332

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[Zhaba]

Stoleway, but the bond makes 20 payments?

[Anonymous]

$400,000 x 6% = $24,000 x 13.5903 = $326,167 bond selling price

Can anyone confirm this price for me?

[stoleway]

Ok I didnt see that, lets do it again.

400,000 x. 4564 = $182,560

(400,000 x 3%) x 13.5903= 163,084

=$345,644

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[Lidis]

400,000* .6756 = 270,240

400,000*3% = 12,000*8.1109= 97,330

Bond price 367,571

[Anonymous]

Bond Price = 400,000 x 0.4564 = 182,560

Interest = 12,000 x 13.5903 = 163,083.6

total bond sale price =. 345,643.6

Why we choose 0.4564 – one time sale price therefore we will use PV of $1 for 20 years @ 4%

How we got (12,000)) – simple (400,000 x 3%) then this constant interest for 20 years @ 4% which = 13.5903

JE is as follow

Cash Dr. 345,644

Discount on BP Dr. 54,356

Bond Payable. Cr. 400,000

[Author]

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