10. On June 30, 2016, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2031 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2016. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1.	Determine the price of the bonds on June 30, 2016.

n = 30 i =______

Cash Flow Amount Present Value

Interest ________ ___________

Principal _________ __________

Price of bonds _______________

Calculate the interest expense Singleton reports in 2016 for these bonds using the effective interest method

Period Ending Cash Interest Pd Bond Interest Expense Premium Amortization Carrying Value

6/30/2016 _____________

12/31/2016 __________ __________ ___________ _____________

11.

Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Machine A could be purchased for $48,000. It will last 10 years with annual maintenance costs of $1,000 per year. After 10 years the machine can be sold for $5,000.

Machine B could be purchased for $40,000. It also will last 10 years and will require maintenance costs of $4,000 in year three, $5,000 in year six, and $6,000 in year eight. After 10 years, the machine will have no salvage value.

Required:

Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations. (Negative amounts should be indicated by a minus sign.)

Calculate the present value of machine A and machine B.

Machine A PV __________ Machine B PV___________