On January 1, 2017, Crane Company issued eight-year bonds with a face value of $

Question

On January 1, 2017, Crane Company issued eight-year bonds with a face value of $6150000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31. The bonds were sold to yield 10%. Table values are:

Present value of 1 for 8 periods at 8% 0.540

Present value of 1 for 8 periods at 10% 0.467

Present value of 1 for 16 periods at 4% 0.534

Present value of 1 for 16 periods at 5% 0.458

Present value of annuity for 8 periods at 8% 5.747

Present value of annuity for 8 periods at 10% 5.335

Present value of annuity for 16 periods at 4% 11.652

Present value of annuity for 16 periods at 5% 10.838

The present value of the interest is:

Explanation / Answer

Calculate present value of interest :

Present value of interest = (6150000*4%*10.838) = 2666148

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