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Question 22 22 23 240 10 points A $100,000 bond was...

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Accounting

Question 22
22
23
240
10 points
A $100,000 bond was issued on 11?10. It pays interest (coupon) of 6% per annum, with payments occurring every six months. The bond is due in 2 years. A potential investor wanted to know what the bond should be worth on the day of issue, if the prevailing rate for similar bonds (market rate) was 8%.
An inexperienced accountant attempted to calculate what the bond should be worth on 1/1/10. Review the work of the accountant, and answer the questions below pertaining to possible mistakes.
Calculation of present value by inexperienced accountant
\table[[\table[[FV],[(payme],[nt)]],Periods of interest,Interest factor,PV],[4000,1,1.043,3,883],[4000,2,1.0609,3,770],[4000,3,1.0927,3,661],[4000,4,1.1255,3,554],[100000,2,1.0609,94,260],[TOTAL,,,$109,128
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