Issue Price of a Bond Abbott, Inc., plans to issue $500,000 of ten percent bonds that...

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Issue Price of a Bond Abbott, Inc., plans to issue $500,000 of ten percent bonds that will pay interest semiannually and matu

business accounting

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Answer 1

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Answer #1

Selling price of bonds is $ 463200	or $463199

Workings:
	Amount	PV factor 6%	Present value
Semi-Annual interest	25000	7.36009	184002.18
Principal	500000	0.55839	279197.39
Total			463199.56


Semi-Annual interest	25000	=500000*10%/2

Semi-annual periods	10	=5*2
PV factor 6%:
Semi-Annual interest	7.36009	=(1-(1.06)^-10)/0.06
Principal	0.55839	=1/1.06^10

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Answer 2

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