What are your expectations for pricing of these bonds

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Question - On January 1, 2016, Haley Co. issued a ten-year bonds with a face amount of $4,000,000 and a standard interest rate of 8% payable annually on January 1. At the time of issuance, the market rate for bonds similar risk is 10%. Compound interest factors are as follows:

 

At 8%

At 10%

Present Value of 1 for 10 periods

0.463

0.386

Present value for an ordinary annuity of 1 for 10 periods

6.710

6.145

Future value of 1 for 10 periods

2.159

2.594

Future value of an ordinary annuity of 1 for 10 periods

14.487

15.937

Present value of an annuity due of 1 for 10 periods

7.247

6.759

Required -

1. What are your expectations for pricing of these bonds?

2. Calculate the selling price of these bonds. Show all your work.

Reference no: EM133050695

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