On January 1, 2017, Bramble Corp. issued eight-year bonds with a face value of $
ID: 2555847 • Letter: O
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