Question & Answer: On January 1, 2017, Swifty Corporation issued eight-year bonds with a face value of $5550000 and a stated interest rate…..

On January 1, 2017, Swifty Corporation issued eight-year bonds with a face value of $5550000 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:

Present value of 1 for 8 periods at 6% 0.627
Present value of 1 for 8 periods at 8% 0.540
Present value of 1 for 16 periods at 3% 0.623
Present value of 1 for 16 periods at 4% 0.534
Present value of annuity for 8 periods at 6% 6.210
Present value of annuity for 8 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% 11.652

The present value of the interest is

$1913751.
$2091407.
$1940058.
$2067930.

Expert Answer

 

$1,940,058.
Please find below the answer and please give thumbs up
Statementshowing Computations
Paticulars Amount
Face Value of bonds          5,550,000.00
Interest per half year = 5550,000*3%              166,500.00
No of periods = 8 *2                         16.00
Present value of annuity for 16 periods at 4%                      11.652
present value of the interest = 166,500 * 11.652          1,940,058.00
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