On December 31, 2007, $490,000of 9% bonds were issued. The market interest rate at the time of issuance was 6%. The bonds pay interest on June 30 and December 31 and mature in 12 years.
Compute the selling price of a single $1000 bond on December, 31 2007.
What is the "present value of 1 factor"?© BrainMass Inc. brainmass.com June 3, 2020, 11:42 pm ad1c9bdddf
Please refer to the attachment for the solution.
Present Value=(Future Value)/〖(1+i)〗^t
where,i=annual interest rate
The term 1/〖(1+i)〗^n is known as the Discount Factor.
Since the bond's payment of the maturity ...
The solution provides step by step method for the calculation of selling price of a bond and present value of 1 factor. Formula for the calculation and interpretations of the results are also included.