Bond Issue Price On December 31, 2018, Goa Hot Rods issued $2,000,000 of 6%, 10-year bonds....
Bond Issue Price
On December 31, 2018, Goa Hot Rods issued $2,000,000 of 6%, 10-year bonds. Interest is payable semiannually on June 30 and December 31.
Required:
What is the issue price if the bonds are sold to yield 8%? (Note: Round to the nearest dollar.)
Homework Answers
| Answer |
| Calculation of Issue price of the bond |
| Issue price of the bonds= $1728199.8 |
| Explanation |
| Interest= $2000000*6%*6/12= $60000 |
| $2000000*6%*6/12 |
| $60000 |
| Issue price of the bonds= |
| Present value of principal amount+Present value of interest |
| = $(2000000*0.45639)+(60000*13.59033) |
| = $1729279.8 |
| Issue price of the bonds= $1728199.8 |
| Please like ( positive rating ) |
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