![TABLE TABLE ofen -117 Present Value of an Ordinary Annuity of 1: po ni =- Present Value of 1: Pria (1 + i] 1.5% 4.0% 4.5% 5.](http://img.homeworklib.com/questions/ea4b3b50-6f2f-11ea-8345-dfbf59b22930.png?x-oss-process=image/resize,w_560)
Homework Answers
| 1. The bonds to yield 10% | 644132.02 | ||
| 2. The bonds to yield 8% | 697171.39 | ||
| Workings: | |||
| Semi-annual interest | 30150 | =670000*9%*6/12 | |
| Number of periods (n) | 10 | =5*2 | |
| 10% interest: | |||
| Amount | PV factor 5% | Present value | |
| Semi-annual interest | 30150 | 7.721735 | 232810.31 |
| Principal | 670000 | 0.613913 | 411321.71 |
| Total | 644132.02 | ||
| 8% interest: | |||
| Amount | PV factor 4% | Present value | |
| Semi-annual interest | 30150 | 8.110896 | 244543.51 |
| Principal | 670000 | 0.675564 | 452627.88 |
| Total | 697171.39 | ||
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