Stowers Research issues bonds dated January 1, 2011, that pay interest semiannua

Question

Stowers Research issues bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds have a $23,000 par value and an annual contract rate of 8%, and they mature in 10 years. Required: Consider each of the following three separate situations. (Use Table B.1, Table B.3) 1. The market rate at the date of issuance is 6%. (a) Determine the bonds' issue price on January 1, 2011. (Round "PV Factors" to 4 decimal places, intermediate calculations and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Explanation / Answer

Market rate at the date of issuance is 6%.

(a) bonds’ issue price on January 1, 2011

The formula is $23,000 (pv1, 3%, 20) + 4%($37,000 )(pva, 3%, 20)

= $13,944.93 + $27,666.11

= $41,611.04

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---