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A company issues a 5-year, 4% coupon bond with a face value of $100,000. The effective market interest rate at the time of issuance is 6%. What are the proceeds from issuing the bond?

 
 
 
 
 
 
 

In Excel, I would put in the following formula: =-PV(0.03,10,2000,100000) = 91,470. Note that I divided 6% by two and doubled the 5 years to 10 periods. The coupon payment is (0.04/2) * 100,000.

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