Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Lev Corp issued $200 in principal of 4-year bonds with a 6
Lev Corp issued $200 in principal of 4-year bonds with a 6.0% stated interest rate and semi-annual interest payments. At the time of the issuance, the discount rate equaled the stated interest rate. What is the annuity factor for the interest payments? Round to two decimal places.
Expert Solution
Computation of Annuity Factor for Interest Payments:
PVIFA = (1 - (1 + r)^-n) / r
Here,
PVIFA = Present Value Interest Factor of Annuity
r = Interest Rate = 6%/2 = 3%
n = Number of Periods = 4 Years *2 Semiannual Periods = 8
PVIFA = (1-(1+3%)^-8)/3% = 7.0197
Or We can calculate this as follows:
| Year | PVIF @3% | |
| Calculation | ||
| 1 | 0.9709 | =1/(1+3%)^1 |
| 2 | 0.9426 | =1/(1+3%)^2 |
| 3 | 0.9151 | =1/(1+3%)^3 |
| 4 | 0.8885 | =1/(1+3%)^4 |
| 5 | 0.8626 | =1/(1+3%)^5 |
| 6 | 0.8375 | =1/(1+3%)^6 |
| 7 | 0.8131 | =1/(1+3%)^7 |
| 8 | 0.7894 | =1/(1+3%)^8 |
| Total | 7.0197 | =SUM(D6:D13) |
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
