The following information applies to the questions displayed below. On January 1

Question

The following information applies to the questions displayed below. On January 1, 2018, Frontier world issues $39.8 million of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride. value 10.00 points Required information Required 1-a. If the market rate is 7%. Calculate the issue price. (EV of$1, PV of S1. EVA of$1, and PVA of$1) (use appropriate factor(s) from the tables provided. Do not round interest rate factors. Enter your answers in dollars not in millions. Round "Market interest rate" to 1 decimal place.) Bond Characteristics Amount Face amount Interest payment Market interest rate Periods to maturity Issue price $ 39,800,000 $ 1,592,000 3.5% 30 1-b. The bonds will issue at O Face amount OA Discount A Premium

Explanation / Answer

Bond Characterstics Face amount 39800000 interest payment 1592000 market interest rate 3.50% periods to maturity 30 issue price 43460088 (39800000*.35628 + 1,592,000*18.39205) 1-b) premium Face amount 39800000 interest payment 1592000 market interest rate 4.50% periods to maturity 30 issue price 36558529 (39800000*.26700 + 1,592,000*16.2889) 3-b) Discount 2-a) Face amount 39800000 interest payment 1592000 market interest rate 4.00% periods to maturity 30 issue price 39800000 (39800000*.30832 + 1,592,000*17.29203) 2b) Face amount

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