Blossom Company issued 6%, 7-year, $310,000 par value bonds that pay interest annually on April 1. The bonds are dated April 1, 2022, and are issued on that date. The discount rate of interest for such bonds on April 1, 2022, is 8%.
Please help! They give you this factor table, too.
This should be all you need! Please help me!
Homework Answers
Solution:
| Computation of bond price | |||
| Table values are based on: | |||
| n= | 7 | ||
| i= | 8.00% | ||
| Cash flow | Table Value | Amount | Present Value |
| Par (Maturity) Value | 0.58349 | $310,000.00 | $180,882 |
| Interest (Annuity) | 5.20637 | $18,600.00 | $96,838 |
| Cash proceeds from issuance of bond | $277,720 | ||
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