Solution-Evaluate the present value and calculating the

Evaluate the present value and calculating the present value

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Reference no: EM13862179

On March 1, 2008, Matt purchased $60,000 of Lawson Co.'s 8%, 17-year bonds at face value. Lawson Co. has paid the annual interest due on the bonds regularly. On March 1, 2013, market interest rates had risen to 12%, and Matt is considering selling the bonds.

Use present value tables (Table 6-4 and Table 6-5)(Use appropriate factor(s) from the tables provided.)

Factors for Calculating the Present Value of $1 ( Table 6-4 )

No. of	Discount Rate
Periods	2%	4%	6%	8%	10%	12%	14%	16%	18%	20%
1	0.98	0.9615	0.9434	0.9259	0.9091	0.8929	0.8772	0.8621	0.8475	0.8333
2	0.961	0.9246	0.8	0.8573	0.8264	0.7972	0.7695	0.7432	0.7182	0.6944
3	0.942	0.889	0.8396	0.7938	0.7513	0.7118	0.675	0.6407	0.W86	0.5787
4	0.924	0.8548	0.7921	0.735	0.683	0.6355	0.5021	0.5523	0.5158	OA 823
5	0.906	0.8219	0.7473	0.6806	0.6209	0.5674	0.5194	0.4761	0.4371	0 .4 019
6	0.888	0.7903	0.705	0.6302	0.5645	0.5066	0.4556	0.4104	0.3704	0.3349
7	0.871	0.7599	0.6651	0.5835	0.5132	0.4523	0.3996	0.3538	0 3139	0.2791
8	0.853	0.7307	0.6274	0.5403	0.4665	4039	0.3506	0.305	0.266	0.2326
9	0.837	0.7026	0.5919	0.5002	0.4241	0.3606	0.3075	0.263	0.2255	0.1938
10	0.82	0.6756	0.5584	OA 632	3855	0.322	0.2697	0.2267	0.1911	0.1 615
11	0.804	0.6496	0.5268	04 289	0.3505	0.2875	0.2366	0.1954	0.1619	0.1346
12	0.788	0.6246	0.497	0.3971	3186	0.2567	0.2076	0.1685	0.1372	0.1122
13	0.773	0.W06	0.4688	0.3677	0.2897	0.2292	0.1821	0.1452	0.1163	0.0935
14	0.758	0.5775	0.4423	0.3405	0.2633	0.2046	0.1507	0.1252	0.0985	0.0779
15	0.743	0.5553	0.4173	0.3152	0.2394	0.1827	0.1401	0.1079	0.0835	0.0649
16	0.728	0.5339	0.3936	0.2919	0.2176	0.1631	0.1229	0.093	0.0708	0.0541
17	0.714	0.5134	0.3714	0.2703	0.1978	0.1456	0.1078	0.0802	0.06	0.0451
18	0.7	0.4936	0.3503	0.2502	0.1799	0.13	0.0946	0.0691	0.0508	0.0376
19	0.686	0.4746	0.3305	0.2317	0.1635	0.1161	0.0829	0.0596	0.0431	0.0313
20	0.673	0.4564	0.3118	0.2145	0.1486	0.1037	0.0728	0.0514	0.0365	0.0261
21	0.6W	0.4388	0.2942	0.1987	0.1351	0.0926	0.0638	0.0443	0.0309	0.0217
22	0.647	0.422	0.2775	0.1839	0.1228	0.0826	0.05W	0.0382	0.0262	0.0181
23	0.634	0.4057	0.2618	0.1703	0.1117	0.0738	0.0491	0.0329	0.0222	0.0151
24	0.622	0.3901	0.247	0.1577	0.1015	0.0659	0.0431	0.0284	0.0188	0.0126
25	0.61	0.3751	0.233	0.14W	0.0923	0.0588	0.0378	0.0245	0.016	0.0105
30	0.552	0.3083	0.1741	0.0994	0.0573	0.0334	0.0196	0.0116	0.007	0.0042
35	0.5	0.2534	0.1301	0.0676	0.0356	0.0189	0.0102	0.0055	0.033	0.0017
40	0.453	0.2083	0.0972	0.046	0.0221	0.0107	0.0053	0.0026	0.0013	0.0007
45	0.41	0.1712	0.0727	0.0313	0.0137	0.0061	0.0027	0.0013	0.0006	0.0033
50	0.372	0.1407	0.0543	0.0213	0.0085	0.0035	0.0014	0.0006	0.0003	0.0001

Table 6-5 Factors for Calculating the Present Value of an Annuity of $1

No. of	Discount Rate
Periods	2%	4%	6%	8%	10%	12%	14%	16%	18%	20%
1	0.98	0.9615	0.9434	0.9259	0.9091	0.8929	0.8772	0.8621	0.8475	0.8333
2	1.942	1.8861	1.8334	1.7833	1.7355	1 .6C01	1.6467	1.6052	1.5656	1.5278
3	2.884	2.7751	2.673	2.5771	2.48w	2.4018	2.3216	2.2459	2.1743	2.1065
4	3.808	3.6299	3.4651	33121	3.1609	3.0373	2.9137	2.7982	2.6901	2.5887
5	4.713	4.4518	4.2124	3.9927	3.7908	3.6048	3.4331	3.2743	3.1272	2.9906
6	5.601	5.2421	4.9173	4.6229	4.3553	4.1114	3.8887	3.6847	34976	3.3255
7	6.472	6.0021	5.5824	5.2064	4.8684	4.5638	4.2883	4.0386	3.8115	3.6046
8	7325	6.7327	6.2098	5.7466	5.3349	4.9676	4.6389	4.3436	4.0776	3.8372
9	8.162	7.4353	6.8017	6.2469	5.759	53282	4.9464	4.6066	4.303	4.031
10	8.983	8.1109	73601	6.7101	6.1446	5.6502	5.2161	4.8332	4 4941	4.1925
11	9.787	8.7605	7.8869	7.139	6.4951	5.9377	54527	5.0286	4.656	43271
12	10.575	9.3851	8.3838	7.5361	6.8137	6.1944	5.6603	5.1971	4.7932	4A392
13	11.348	9.9856	8.8527	7.9038	7.1034	6A235	5.8424	5.3423	4.9395	4.5327
14	12.106	10.5631	9.295	8.2442	7.3667	6.6282	6.0021	5A675	5.0081	4.6106
15	12.849	11.1184	9.7122	8.5595	7.6061	6.8109	6.1422	5.5755	5.0916	4.6755
16	13.578	11.6523	10.1059	8.8514	7.8237	6.974	6.2651	5.6685	5.1624	4.7296
17	14.292	12.1657	104773	9.1216	8.0216	7.1196	63729	5.7487	5.2223	4.7746
18	14.992	12.6593	10.8276	93719	8.2014	7.2497	6A674	5.8178	5.2732	4.8122
19	15.678	13.1339	11.1581	9.6036	83649	73658	6.5504	5.8775	53162	4.8435
20	16.351	13.5933	11 A 699	9.8181	8.5136	7.A694	6.6231	5.9288	5.3527	4.8696
21	17.011	14.0292	11.7641	10.0168	8.6487	7.562	6.687	5.9731	5.3837	4.8913
22	17.658	14.4511	12.0416	10.2007	8.7715	7.6446	6.7429	6.0113	5.4099	4.9094
23	18.292	14.8568	12.3034	10.3711	8.8832	7.7184	6.7921	6.0442	54321	4.9245
24	18.914	15.247	12.5504	10.5288	8.9847	7.7843	6.8351	6.0726	5.4509	4.9371
25	19.523	15.6221	12.7834	10.6748	9.077	7.8431	6.8729	6.0971	5.4609	4.9476
30	22.396	17.292	13.7648	11.2578	9.4269	8.0552	7.0027	6.1772	5.5168	4.9789
35	24.E	18.6646	144982	11.6546	9.6442	8.1755	7.07	6.2153	5.5386	4.9915
40	27.355	19.7928	15.0463	11.9246	9.7791	8.2438	7.105	6.2335	5.5482	4.9966
45	29.49	20.72	15.4558	12.1084	9.8628	8.2825	7.1232	6.2421	5.5523	4.9986
50	31.424	21.4822	15.7619	12.2335	9.9148	8.3045	7.1327	6.2463	5.5541	4.9995

Reference no: EM13862179

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Evaluate the present value and calculating the present value

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