Chapter 14, Problem 8E

To determine

Introduction: Essentially a bond is nothing but a debt. It is a way for companies to raise money. The company have to pay interest payments on the money they have raised by issuing bonds. Interest is an annual amount calculated at an annual percentage rate on the face value of the bond. Though it can be paid every day or semi annually or yearly. But always remember the interest rates quoted will always be per annum.

1.To calculate: How much interest will Citywide company pay (in cash) to the bondholders every six months?

To determine

2. To calculate : Number of Semiannual interest payments that will be paid during the life of the bond.

To determine

3. Whether bonds are issued at par , at a discount or premium.

To determine

4. To calculate : Price of the bonds at the time of issue