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What is the present value of this bond issue

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Question - The total face value of these bonds is $1,000,000 and they bear interest at 8% payable semi-annually on December 31 and June 30. The market rate of interest for this similar bond is 10%. The bonds have a term of 10 years and were issued on January 1, 2017 which is the date noted on the face value of the bond.

Required -

Part A - What is the present value of this bond issue?

Part B - What would the present value of the bonds be if the market rate of interest was 6% instead?

Assuming the same facts: The Solar Power Equipment Sales Company has decided to fund its new solar project with a bond issue. The total face value of these bonds is $1,000,000 and they bear interest at 8% payable semi-annually on January 1st and July 1st. The market rate of interest for this similar bond is 10%. The bonds have a term of 10 years and were issued on January 1, 2017 which is the date noted on the face value of the bond.

Part C - What is the present value of the bond issued?

Part D - What would the present value of the bonds be if market rate of interest was 6% instead?

Reference no: EM132611430

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