Question

Moss Co. issued $105,000 of four-year, 12% bonds with interest payable semiannually, at a market (effective) interest rate of 9%. Determine the present value of the bonds payable, using the present value tables in Exhibit 8 and Exhibit 10.

Answer 1

$115,388

Step-by-step explanation:

The explanation is shown in the picture below

Answer 2

price of the bond= $ 117,462.53.

Step-by-step explanation:

price of the bond = present value of coupon payment + present value of face value.

price of the bond= PMT X (1-( 1/( 1+r∧n))/r + ( face value/(1+r)∧n

price of the bond= 6300x (1-(1.045∧10))/0.045 + (105000/1.045∧10)

price of the bond= $ 117,462.53.

therefore the present value of the bonds payable using thepresent value table is evaluated to be $ 117,462.53.