Reply to thread

Message

<blockquote data-quote="blazinb2000" data-source="post: 5344464" data-attributes="member: 587511">Alright I am doing some studying for finals and I am looking over some examples my professor handed out to us to study for the final exam. I can&#039;t figure out where he is coming up with the answer so I thought maybe someone on here could help me. I am not asking for help to do homework, only to help me understand an example problem given out by my professor. This is a direct copy and paste from his page. I would email him but the test is tomorrow and I doubt I would get a reply before then. The problem:Simpson Corporation issues 18% coupon bonds on January 1, 2007. The bonds have a face value of $3,600,000, interest is payable annually on December 31, and have a term of twelve years. The market rate of interest on January 1, 2007 is 9%.Required:a.&nbsp; &nbsp; At what price (where par = 100) would the 18% bonds be issued?His answer:= 648,000 (PVA, n=12, i=9%) + 3,600,000 (PV, n=12, i=9%)= 5,919,933.60Price = 5,919,933.60 / 3,600,000 = 164.44My problem is how he came up with the 5,919,933.60 number? </blockquote>

[QUOTE="blazinb2000, post: 5344464, member: 587511"] Alright I am doing some studying for finals and I am looking over some examples my professor handed out to us to study for the final exam. I can't figure out where he is coming up with the answer so I thought maybe someone on here could help me. I am not asking for help to do homework, only to help me understand an example problem given out by my professor. This is a direct copy and paste from his page. I would email him but the test is tomorrow and I doubt I would get a reply before then. The problem: Simpson Corporation issues 18% coupon bonds on January 1, 2007. The bonds have a face value of $3,600,000, interest is payable annually on December 31, and have a term of twelve years. The market rate of interest on January 1, 2007 is 9%. Required: a. At what price (where par = 100) would the 18% bonds be issued? His answer: = 648,000 (PVA, n=12, i=9%) + 3,600,000 (PV, n=12, i=9%) = 5,919,933.60 Price = 5,919,933.60 / 3,600,000 = 164.44 [B]My problem is how he came up with the 5,919,933.60 number? [/B] [/QUOTE]

Verification