Issue Price The following terms relate to independent bond issues: 670 bonds; $1

Question

Issue Price

The following terms relate to independent bond issues:

670 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments

670 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments

820 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments

2,030 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments

Required:

Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. Refer to the tables above for present value factors. If required, do not round intermediate calculations and round all final answers to the nearest dollar.

$ 619201

$ 618262

$ 717810

$ 619201

$ 618262

$ 717810

Explanation / Answer

Solution.

FV 500, N 30, R 5%

computes to a PV of = $500 x .2313 = 115.65.
Annuity 60, N 30, R 5%

computes to a PV of = 60 x 15.3724 = 922.34
Total PV $1,037.99

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