On January 1, 2019, Lightfoot Corporation issues 10%, 5-year bonds with a face value of $275,000 when the effective interest rate is 9%. Interest is to be paid semiannually on June 30 and December 31. Prepare calculations to prove that the selling price of the bonds is $285,880.07. Click here to access the tables to use with this exercise. Round your answers to two decimal places, if necessary.

Value of bond = Present value of coupon payments + Present value of maturity or par value

Present value of coupon payments:

Coupon is semi annual = 275,000 * 10% * 1/2

= $13,750

Interest = 9%/ 2 = 4.5%

Duration = 5 * 2 = 10 semi annual periods

Present value will be that of an annuity as this cash flow is fixed:

= 13,750 * (1 - (1 + 4.5%)⁻¹⁰) / 4.5%

= $108,799.87

Present value of par value:

= 275,000 / ( 1 + 4.5%)¹⁰

= 177,080.11

Value of bond:

= 108,799.87 + 177,080.11

= $285,879.98

= $285,880

Proven.

Difference due to rounding errors.

it's actually a very difficult task, due to not many people can make 2 million dollars in 2 years. besides that, to the not-so-realistic ideas, you can create a business. it could be practically anything, but make it into a business that isn't that known yet, you get me? also, lets not forget about stock market. that's where all the good stuff happens. use investments at the beginning and begin to raise up your business or whatever you're going to do. as this is a very non-realistic idea, it's still worth the shot!

the amount of money you earn by working is your income.

the percentage of people actively looking for a job is called unemployment.