Respuesta :
Answer:
Ans. The carrying value of this bond on Dec. 31/17 is $25,185,800.90
Explanation:
Hi, the carrying value of this debt depends on the unpaid coupons and its principal, and since 2 semi-annual coupons were already paid, we have to bring to present value (to Dec /17) the remaining coupons and the principal to be paid. The formula is as follows.
[tex]Carrying Value=\frac{Coupon((1+r)^{n-1}-1) }{r(1+r)^{n-1} } +\frac{FaceValue+Coupon}{(1+r)^{n} }[/tex]
Where:
[tex]Coupon=25,300,000*\frac{0.078}{2} =986,700[/tex]
[tex]Yield(semi-annual)=(1+0.08)^{\frac{1}{2} } -1=0.03923[/tex]
[tex]n=20years*2-2(paid coupons)=38[/tex]
[tex]Carrying Value=\frac{986,700((1+0.03923)^{37}-1) }{0.03923(1+0.03923)^{37} } +\frac{25,300,000+986700}{(1+0.03923)^{38} }[/tex]
[tex]Carrying Value=25,185,800.90[/tex]
Best of luck.
