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    This posting addresses the present value of bond principal.

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    On January 1, 2010, Ellison Co. issued 8-year bonds with a face value of 1,000,000 and a stated interest rate of 6% payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are as follows:

    Present value of one for eight periods at 6% .627
    Present value of one for eight periods at 8% .540
    Present value of one for 16 periods at 3% .623
    Present value of one for 16 periods at 4% .534
    Present value of annuity for eight periods at 6% 6.210
    Present value of annuity for eight periods at 8% 5.747
    Present value of annuity for 16 periods at 3% 12.561
    Present value of annuity for 16 periods at 4% 11.852

    The present value of the principal is:
    a.) 534,000
    b.) 540,000
    c.) 623,000
    d.) 627,000.

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    https://brainmass.com/business/annuity/present-value-of-bond-principal-466172

    Solution Preview

    The present value of 1 for 16 periods at 4% is .534. We use 4% ...

    Solution Summary

    The solution provides the correct answer to the multiple choice question for Ellison Co., which states, On January 1, 2010, Ellison Co. issued 8-year bonds with a face value of 1,000,000 and a stated interest rate of 6% payable seminanually on June 30 and December 31. The bonds were sold to yield 8% ...

    $2.19

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