Question

Your company plans to issue bonds later in the upcoming year. But with the economic uncertainty and varied interest rates, it is not clear how much money the company will receive when the bonds are issued. The company is committed to issuing 2,000 bonds, each of which will have a face value of $ 1,000, a stated interest rate of 8 percent paid annually, and a period to maturity of 10 years.
Required:
1. Compute the bond issue proceeds assuming a market interest rate of 8 percent. (Do not round until totaling the bond proceeds, at which point you should round the total bond proceeds to the nearest thousand dollars.) Also, express the bond issue price as a percentage by comparing the (rounded) total proceeds to the total face value.
2. Compute the bond issue proceeds assuming a market interest rate of 7 percent. (Do not round until totaling the bond proceeds, at which point you should round the total bond proceeds to the nearest thousand dollars.) Also, express the bond issue price as a percentage by comparing the (rounded) total proceeds to the total face value.
3. Compute the bond issue proceeds assuming a market interest rate of 9 percent. (Do not round until totaling the bond proceeds, at which point you should round the total bond proceeds to the nearest thousand dollars.) Also, express the bond issue price as a percentage by comparing the (rounded) total proceeds to the total face value.


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  • CreatedNovember 02, 2015
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