A company issues bonds with a par value of $370,000. The bonds mature in 5 years and pay 8% annual interest in semiannual payments. The annual market rate for the bonds is 6%. Compute the price of the bonds on their issue date. The following informat is taken from present value tables: Present value of an annuity (series of payments) for 10 periods at 3% Present value of an annuity (series of payments) for 10 periods at 4% Present value of 1 (single sum) due in 10 periods at 3% Present value of 1 (single sum) due in 10 periods at 4% Table Values are Based on: n= Cash Flow Par (maturity) value Interest (annuity) Price of honde Table Value Amount Present Value 8.5302 8.1109 0.7441 0.6756

A company issues bonds with a par value of $370,000. The bonds mature in 5 years and pay 8% annual interest in semiannual payments. The annual market rate for the bonds is 6%. Compute the price of the bonds on their issue date. The following informat is taken from present value tables: Present value of an annuity (series of payments) for 10 periods at 3% Present value of an annuity (series of payments) for 10 periods at 4% Present value of 1 (single sum) due in 10 periods at 3% Present value of 1 (single sum) due in 10 periods at 4% Table Values are Based on: n= Cash Flow Par (maturity) value Interest (annuity) Price of honde Table Value Amount Present Value 8.5302 8.1109 0.7441 0.6756

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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