Homework Answers
| Calculate present value of face value of bond | |
| Particulars | Amount |
| Face value of bonds | $ 300,000,000 |
| Pv factor at 5% for 40 periods | 0.14205 |
| Present value of face value of bonds | $ 42,615,000 |
| Present value of $1 annuity table at 40 periods at 5% is 0.14205 | |
| Calculate present value of interest payment ( ordinary annuity table) | |
| Interest payment (3000000000*8%/2) | $ 12,000,000 |
| Pv factor at 5% for 40 periods | 17.15909 |
| Present value of interest payment | $ 205,909,080 |
| Calculate price of bond | $ 248,524,080 |
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