Share
Explore BrainMass

bond

If the company were to issue 10-year bonds with a face value of $100,000 and the market rate of interest is 10%, what would the proceeds from the sale if the bonds were zero-interest bonds?

What would be the proceeds if the annual interest payments did not begin for 5 years and the stated rate of interest were 10%?

What would be the proceeds if the bonds paid interest annually for 10 years at 10%?

Solution Preview

If the company were to issue 10-year bonds with a face value of $100,000 and the market rate of interest is 10%, what would the proceeds from the sale if the bonds were zero-interest bonds?

Since the bond price is not told in this question, we assume that the bonds are sold at P totally.
Future value = 100,000
Annual payment = 0
Number of periods = 10
Interest rate= ...

Solution Summary

If the company were to issue 10-year bonds with a face value of $100,000 and the market rate of interest is 10%, what would the proceeds from the sale if the bonds were zero-interest bonds?

$2.19