M10-2 Computing the Price of a Bond Issued at Par LO10-2 Williams Company plans

Question

M10-2 Computing the Price of a Bond Issued at Par LO10-2 Williams Company plans to issue bonds with a face value of $608,000 and a coupon rate of 6 percent. The bonds will mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds are sold on January 1 of this year. Ev ors. P of 1 AA and p S1 Use the appropriate factor s from the tables provided. Round your final answer to whole dollars.) Determine the issuance price of the bonds assuming an annual market rate of interest of 6 percent. Issuance price

Explanation / Answer

Both market interest rate and coupon rate are same 6%. If market interest rate and coupon interest rate are same, then the bond is said to be issued at par.

Hence, the issue price of the bond is $608,000

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