On January 1, a company issues 8%. 5 year, $300,000 bonds that pay interest semiannually. On the issue date, the annual market rate of interest is 6%. The following information is taken from present value tables:
Present value of an annuity for 10 periods at 3% 8.5302
Present value of an annuity for 10 periods at 4% 8.1109
Present value of 1 due in 10 periods at 3% 0.7441
Present value of 1 due in 10 periods at 4% 0.6756
What is the issue (selling) price of the bond?
a.$420,000
b.$402,362
c.$300,010
d.$308,107
e.$325,592
Answers: 1
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On January 1, a company issues 8%. 5 year, $300,000 bonds that pay interest semiannually. On the iss...
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