I need help with this accounting question. Please help!!!!. I need some guideness
2007-01-19 13:39:51 · 3 answers · asked by carrie m 1 in Business & Finance ➔ Other - Business & Finance
The basic idea is to discount the future cash flows at the current market rate.
So, since your bond pays out 10% a year, you have semi annual cash inflows of 1,000 (5% * 20,000). Then, you have a lump sum cash inflow of 20,000(the face value of the bonds) ten years from now. You discount the 20,000 to present using the 8% market rate over 10 years, then you find the present value of an annuity of 1000 at 4% for 20 periods. Add the two pieces together and you have your bond price.
As a note, bonds pay interest semiannually unless stated otherwise.
2007-01-19 13:52:50 · answer #1 · answered by Sean Y 2 · 0⤊ 0⤋
Get free rates
2015-02-11 08:12:49 · answer #2 · answered by Mabelle 1 · 0⤊ 0⤋
On the USGOV web site...it has all the info needed for taxes
2007-01-19 13:42:50 · answer #3 · answered by fade_this_rally 7 · 0⤊ 0⤋