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On March 1, 2008, Matt purchased $60,000 of Lawson Co.'s 8%, 17-year bonds at face value. Lawson Co. has paid the annual interest due on the bonds regularly. On March 1, 2013, market interest rates had risen to 12%, and Matt is considering selling the bonds.

Use present value tables (Table 6-4 and Table 6-5)(Use appropriate factor(s) from the tables provided.)

Factors for Calculating the Present Value of $1 ( Table 6-4 )

No. of  Discount Rate    
Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
1 0.98 0.9615 0.9434 0.9259 0.9091 0.8929 0.8772 0.8621 0.8475 0.8333
2 0.961 0.9246 0.8 0.8573 0.8264 0.7972 0.7695 0.7432 0.7182 0.6944
3 0.942 0.889 0.8396 0.7938 0.7513 0.7118 0.675 0.6407 0.W86 0.5787
4 0.924 0.8548 0.7921 0.735 0.683 0.6355 0.5021 0.5523 0.5158 OA 823
5 0.906 0.8219 0.7473 0.6806 0.6209 0.5674 0.5194 0.4761 0.4371 0 .4 019
6 0.888 0.7903 0.705 0.6302 0.5645 0.5066 0.4556 0.4104 0.3704 0.3349
7 0.871 0.7599 0.6651 0.5835 0.5132 0.4523 0.3996 0.3538 0 3139 0.2791
8 0.853 0.7307 0.6274 0.5403 0.4665 4039 0.3506 0.305 0.266 0.2326
9 0.837 0.7026 0.5919 0.5002 0.4241 0.3606 0.3075 0.263 0.2255 0.1938
10 0.82 0.6756 0.5584 OA 632 3855 0.322 0.2697 0.2267 0.1911 0.1 615
11 0.804 0.6496 0.5268 04 289 0.3505 0.2875 0.2366 0.1954 0.1619 0.1346
12 0.788 0.6246 0.497 0.3971 3186 0.2567 0.2076 0.1685 0.1372 0.1122
13 0.773 0.W06 0.4688 0.3677 0.2897 0.2292 0.1821 0.1452 0.1163 0.0935
14 0.758 0.5775 0.4423 0.3405 0.2633 0.2046 0.1507 0.1252 0.0985 0.0779
15 0.743 0.5553 0.4173 0.3152 0.2394 0.1827 0.1401 0.1079 0.0835 0.0649
16 0.728 0.5339 0.3936 0.2919 0.2176 0.1631 0.1229 0.093 0.0708 0.0541
17 0.714 0.5134 0.3714 0.2703 0.1978 0.1456 0.1078 0.0802 0.06 0.0451
18 0.7 0.4936 0.3503 0.2502 0.1799 0.13 0.0946 0.0691 0.0508 0.0376
19 0.686 0.4746 0.3305 0.2317 0.1635 0.1161 0.0829 0.0596 0.0431 0.0313
20 0.673 0.4564 0.3118 0.2145 0.1486 0.1037 0.0728 0.0514 0.0365 0.0261
21 0.6W 0.4388 0.2942 0.1987 0.1351 0.0926 0.0638 0.0443 0.0309 0.0217
22 0.647 0.422 0.2775 0.1839 0.1228 0.0826 0.05W 0.0382 0.0262 0.0181
23 0.634 0.4057 0.2618 0.1703 0.1117 0.0738 0.0491 0.0329 0.0222 0.0151
24 0.622 0.3901 0.247 0.1577 0.1015 0.0659 0.0431 0.0284 0.0188 0.0126
25 0.61 0.3751 0.233 0.14W 0.0923 0.0588 0.0378 0.0245 0.016 0.0105
30 0.552 0.3083 0.1741 0.0994 0.0573 0.0334 0.0196 0.0116 0.007 0.0042
35 0.5 0.2534 0.1301 0.0676 0.0356 0.0189 0.0102 0.0055 0.033 0.0017
40 0.453 0.2083 0.0972 0.046 0.0221 0.0107 0.0053 0.0026 0.0013 0.0007
45 0.41 0.1712 0.0727 0.0313 0.0137 0.0061 0.0027 0.0013 0.0006 0.0033
50 0.372 0.1407 0.0543 0.0213 0.0085 0.0035 0.0014 0.0006 0.0003 0.0001

Table 6-5 Factors for Calculating the Present Value of an Annuity of $1

No. of  Discount Rate
Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
1 0.98 0.9615 0.9434 0.9259 0.9091 0.8929 0.8772 0.8621 0.8475 0.8333
2 1.942 1.8861 1.8334 1.7833 1.7355 1 .6C01 1.6467 1.6052 1.5656 1.5278
3 2.884 2.7751 2.673 2.5771 2.48w 2.4018 2.3216 2.2459 2.1743 2.1065
4 3.808 3.6299 3.4651 33121 3.1609 3.0373 2.9137 2.7982 2.6901 2.5887
5 4.713 4.4518 4.2124 3.9927 3.7908 3.6048 3.4331 3.2743 3.1272 2.9906
6 5.601 5.2421 4.9173 4.6229 4.3553 4.1114 3.8887 3.6847 34976 3.3255
7 6.472 6.0021 5.5824 5.2064 4.8684 4.5638 4.2883 4.0386 3.8115 3.6046
8 7325 6.7327 6.2098 5.7466 5.3349 4.9676 4.6389 4.3436 4.0776 3.8372
9 8.162 7.4353 6.8017 6.2469 5.759 53282 4.9464 4.6066 4.303 4.031
10 8.983 8.1109 73601 6.7101 6.1446 5.6502 5.2161 4.8332 4 4941 4.1925
11 9.787 8.7605 7.8869 7.139 6.4951 5.9377 54527 5.0286 4.656 43271
12 10.575 9.3851 8.3838 7.5361 6.8137 6.1944 5.6603 5.1971 4.7932 4A392
13 11.348 9.9856 8.8527 7.9038 7.1034 6A235 5.8424 5.3423 4.9395 4.5327
14 12.106 10.5631 9.295 8.2442 7.3667 6.6282 6.0021 5A675 5.0081 4.6106
15 12.849 11.1184 9.7122 8.5595 7.6061 6.8109 6.1422 5.5755 5.0916 4.6755
16 13.578 11.6523 10.1059 8.8514 7.8237 6.974 6.2651 5.6685 5.1624 4.7296
17 14.292 12.1657 104773 9.1216 8.0216 7.1196 63729 5.7487 5.2223 4.7746
18 14.992 12.6593 10.8276 93719 8.2014 7.2497 6A674 5.8178 5.2732 4.8122
19 15.678 13.1339 11.1581 9.6036 83649 73658 6.5504 5.8775 53162 4.8435
20 16.351 13.5933 11 A 699 9.8181 8.5136 7.A694 6.6231 5.9288 5.3527 4.8696
21 17.011 14.0292 11.7641 10.0168 8.6487 7.562 6.687 5.9731 5.3837 4.8913
22 17.658 14.4511 12.0416 10.2007 8.7715 7.6446 6.7429 6.0113 5.4099 4.9094
23 18.292 14.8568 12.3034 10.3711 8.8832 7.7184 6.7921 6.0442 54321 4.9245
24 18.914 15.247 12.5504 10.5288 8.9847 7.7843 6.8351 6.0726 5.4509 4.9371
25 19.523 15.6221 12.7834 10.6748 9.077 7.8431 6.8729 6.0971 5.4609 4.9476
30 22.396 17.292 13.7648 11.2578 9.4269 8.0552 7.0027 6.1772 5.5168 4.9789
35 24.E 18.6646 144982 11.6546 9.6442 8.1755 7.07 6.2153 5.5386 4.9915
40 27.355 19.7928 15.0463 11.9246 9.7791 8.2438 7.105 6.2335 5.5482 4.9966
45 29.49 20.72 15.4558 12.1084 9.8628 8.2825 7.1232 6.2421 5.5523 4.9986
50 31.424 21.4822 15.7619 12.2335 9.9148 8.3045 7.1327 6.2463 5.5541 4.9995

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