If $1,000,000 of 8% bonds are issued at 102, the amount of cash received from the sale

If $1,000,000 of 8% bonds are issued at 102¾, the amount of cash received from the sale is

Solution:
Given, face value = $1,000,000

Points = 102 ¾

= (102(4) + 3) / 4

= (408 + 3) / 4

Points = 411 / 4

Amount of cash received from the sale = face value × points / 100

Cash received = 1000000 × 411 / 4(100)

= 1000000 × 411 / 400

= 10000 × 411 / 4

= 4110000 / 4

= 1027500

Therefore, the cash received from the sale is $1027500.

Example: If $2,000,000 of 8% bonds are issued at 70, the amount of cash received from the sale is

Solution:

Given, face value = $2,000,000

Points = 70

Amount of cash received from the sale = face value × points/100

Cash received = 2000000 × 70/100

= 2000000 × 70/100

= 20000 × 70

= 1400000

Therefore, the cash received from the sale is $1400000.

If $1,000,000 of 8% bonds are issued at 102¾, the amount of cash received from the sale is

Summary:
If $1,000,000 of 8% bonds are issued at 102 ¾ , the amount of cash received from the sale is $1027500.

Answer rating: 100% (QA)

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