On January 1, 2019, Kroger Corporation issued $10,000,000 of 8% bonds, due in five years with interest payable annually on December 31. The market yield rate is 9 percent. Calculate the present value (market value) of the bonds.

What will be an ideal response?


Interest = $10,000,000 × .08 = $800,000 × 3.88965 pres. value of annuity =$3,111,720Principal = $10,000,000 × .64993 present value of single sum =6,499,300Present (market) value of the bonds =$9,611,020

Business

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