APPLY THE CONCEPTS: Calculate the selling price of a bond Bond indenture Issue Date: 1/1/2011 Face value: $100,000 Coupon Rate of Interest: 6% annually Maturity date: 12/31/2013 Additional information • The market interest rate for bonds of similar risk is 8%. • Interest is paid out on an annual basis. • The market price of the bond has yet to be determined. Part 1: Calculate the present value of the face amount to be received at maturity. Part 2: Calculate the present value of the interest payments to be paid out periodically Part 3: Add the figures calculated in parts 1 and 2 together.  |
