TABLE B1 Present Value of 1 Rate Perieds 2 7 8 9 0990 09804

TABLE B.1 Present Value of 1 Rate Perieds 2% 7% 8% 9% 0.990 0.9804 0.9709 09615 0.9524 0.9434 0.9346 0.9259 0.9174 0.909 08929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.915 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 0.9610 0.9238 0.8885 08548 0.8227 0.792 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 05674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.665 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.424 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0475 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 02567 0.1869 0.8787 0.7730 0.6810 0.6006 0303 0.4688 0.4150 03677 0.3262 02897 02292 0.1625 0.8700 0.7579 0.661 0.5775 0.505 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.458 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.231 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 02584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.375 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 055 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.130 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.022 0.0107 00037

Solution

1 Par(maturity value) Semiannual Semi annual cash rate interest payment 640,000 3.50% = 22400 2) Number of payments 12 3) At a discount (since the stated rate of 7% is less than market rate) 4) table values are based on: n= 12 i= 5% Cash flow table value amount PV par(MV) 0.5568 * 640,000 356352 interest 8.8633 * 22,400 198538 price bonds 554890 5) journal entry tr      General journal Debit Credit cash 554890 discount on bonds payable 85,110 bonds payable 640,000