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Dempsey Railroad Co. is about to issue $400,000 of 10-year bonds paying an 11% interest rate, with interest payable annually. The discount rate for such securities is 10%. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) How much can Dempsey expect to receive for the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,525.) Dempsey can expect to receive

Respuesta :

The amount Dempsey can expect to receive from the sale of the bonds is $424,578.27.

What is the amount Dempsey can expect to receive from the sale of the bonds ?

The amount that would be recieved from the sale of the bond is the present value of the bond. Present value is the sum of discounted cash flows.

Present value can be determined using a financial calcualtor:

  • Cash flow each year from year 1 to 10 = 0.11 x 400,000 = 44000
  • Cash flow in year 10 = $400,0000
  • I = 10%

PV = $424,578.27

To learn more about present value, please check: https://brainly.com/question/26537392

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