Annuity Assignment | Homework For You
Sental, Inc. plans to issue a 10-year semiannual bond with a face value of $845,000 with a coupon rate of 6%. On the date of issue, it expects the market rate for similar bonds will be 2%. Under these conditions, Sental would like to know how much this issuance would raise.
What framework will you use to solve this problem?
- Cost-Volume-Profit (CVP)
- Counting – Permutation or Combination
- Time Value of Money (TVM)
- Binomial Probability – B(n, p)
- Normal or Standard Normal Distribution
Complete the table below. For the amounts (PV, PMT, & FV) please enter the number only with no dollar sign or commas.
TVM Data Table
| c/y | n | i | PV | PMT | FV |
| 1 | |||||
Which type of annuity should you use for this problem?
- ordinary annuity
- annuity due
What is the value of the annuity factor that is used to value the cash flows of the interest payments?
What is the value of the discount factor, DF(), that is used to discount the maturity value?
How much does Sental raise from this issue? $ . You may ignore transaction costs. Please enter commas separating thousands (but do not enter the dollar sign. Get Finance homework help today
