On January 1, 2017, Bramble Corp. issued eight-year bonds with a face value of $

Question

On January 1, 2017, Bramble Corp. issued eight-year bonds with a face value of $6550000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:

Present value of 1 for 8 periods at 10% 0.467

Present value of 1 for 8 periods at 12% 0.404

Present value of 1 for 16 periods at 5% 0.458

Present value of 1 for 16 periods at 6% 0.394

Present value of annuity for 8 periods at 10% 5.335

Present value of annuity for 8 periods at 12% 4.968

Present value of annuity for 16 periods at 5% 10.838

Present value of annuity for 16 periods at 6% 10.106

The present value of the interest is

Explanation / Answer

Semi-annual interest = 6550000*10%/2= $327500 The present value of the interest=327500*10.106= $3309715

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