Question

E connect Chapter 10 Question 7-1 Save & Exit Submit 14 points Trew Company plans to issue b rds with a tace value ofsoooo and a coupon me of 6 per ent. The bonds wil maten10years pay interest sen anu?ye oy ant 30 and De nter 31, Alde,s are sold on January 1 of this year. (FV of $1, PV ot $1. EVA o $1, and PVA of $1) (Use the appropriate factor s) from the tables provided. Round your final answer to whole dollars) Determine the issuance price of the bonds assuming an annual market rate of interest of 8.5 percent References Book& Resources Leaming Objective 10-04 Report bonds peyuble andinstse for bornd seaurtes ssued at a discount Difficulty 1 Easy 20 883,

Answer 1

Present Value of Interest Payment Present Value of Redemption Amount PVIFA(4.25%, 20 Periods) x 900,000 x 6%/2 PVIF(4.25%, 20 Periods) x 900,000 358948.80 391500.00 750448.80 Present Value There can be a small difference in asnwer due to PVIF Factors