Purchase Solution

Compounding Frequency and Present Values

Not what you're looking for?

Ask Custom Question

A. Table Factor X, Future Value $X

Present Value Rate Time Compounding Frequency Table Factor Future Value
a. $5,000 12% 2 yrs Annual
b. $5,000 12% 2 yrs Semiannual
c. $5,000 12% 2 yrs. Quarterly
d. $5,000 12% 2 yrs Monthly

Please show Calculations.

2. For each of the following independent situations, determine (1) whether the bonds sold at face value, a premium, or at a discount, and (2) whether interest expense recognized each year for the bonds was less than, equal to, or greater than the amount of interest paid on the bonds.

a. Bonds with a stated rate of 10% were sold to yield an effective rate of 8%.
b. Bonds with a stated rate of 7% were sold to yield an effective rate of 7%.
c. Bonds with a stated rate of 6% were sold to yield an effective rate of 11%.

Please show calculations.

3. Rocky Road Company sold $5 million of six-year sox percent debentures (bonds) on January 1, 2009. The bonds sold to yield an effective rate of 7%. Interest is paid annually on December 31st.

a. What is the price of the bonds?
b. What would be the price of the bonds if they were sold to yield a real rate of 5%?

Purchase this Solution

Solution Summary

The expert examines compounding frequency and present values.

Purchase this Solution


Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.