Nulidad

BONDS



ON JULY 1, 2011, PRIMO CORPORATION, A WHOLESALER OF USED ROBOTIC EQUIPMENT, ISSUED $15,000,000.00 OF TEN YEAR, 11% BONDS AT
A MARKET RATE OF INTEREST OF 12 % AND WITHA CONTRACT RATE OF INTEREST OF 11% RECEIVING PROCEEDS FOR CASH ARE: $14,139,760.00

THE PAYMENT OF INTEREST ON THE BONDS ARE PAYABLE TO INVESTORS SEMIANNUALLY ON DECEMBER 31 AND JUNE 30.HERE IT IS THE CONCLUTIONS AND THINKING
OF THE PROBLEM:


WE HAVE 3 RULES:


1. WHEN THE MARKET RATE OF INTEREST IS HIGHER THAN THE CONTRACT RATE OF INTEREST = DISCOUNT


2.WHEN THE MARKET RATE OF INTEREST IS LOWER THAN THE CONTRACT RATE OF INTEREST= PREMIUM


3. WHEN THE MARKET RATE OF INTEREST = THE CONTRACT RATE OF INTEREST=FACE AMOUNT




A) IN THIS CASETHE BOND WILL BE SELL AT DISCOUNT IN ORDER TO ENTICE INVESTORS TO ACCEPT A CONTRACT RATE OF INTEREST THAT IS BELLOW THE MARKET RATE SO BY THIS MEANS THE MARKET ADJUST A BOND”S CONTRACT RATE OFINTEREST THAT IS LOWER TO THE HIGHER MARKET RATE OF INTEREST.


B) THE PRESENT VALUE OF FACE AMOUNT OF $15,000,000.00 DUE IN 10
YEARS AT 12 % COMPOUNDED SEMIANNUALLY IS AS FOLLOW:


1.FUTURE VALUE OR FACE AMOUNT: $15,000,000.00
2. MARKET RATE OF INTEREST 12% COMPOUNDED SEMIANNUALLY IS :
12/2 = 6 %.
3. TERM (N) OF 10YEARS COMPOUNDED SEMIANNUALLY= 20 PERIODS.
4.WHAT IS THE PRESENT VALUE OF OUR FACE AMOUNT=?


AFTER THE INFORMATION WE DESCRIBED THE PRESENT VALUE EQUATION FOR OUR FACE AMOUNT AS WELL THE ANNUITIES OR PAYMENTS OF INTEREST IS AS FOLLOWS :PV= FV 15,000,000.00 15,000,000.00
___________ = _______________ = _____________ = $ 4,677,071.59(1+TEF)n (1.06)20 3.207135


C) THE PRESENT VALUE OF 20 SEMIANNUAL INTEREST PAYMENTS OR
ANNUITIES OF $825,000.00...