Question

Hello,

I need help with the following question.

On January 1, Comcast issues $300,000 of 15-year, 10% bonds payable for $351,876, yielding an effective semiannual interest rate of 4%. Interest is payable semiannually on June 30 and December 31.

Question: Calculate the issue price of this bond.

Hello,

I need help with the following question. Please show you calculations with explanation.

On January 1, Comcast issues $300,000 of 15-year, 10% bonds payable for $351,876, yielding an effective semiannual interest rate of 4%. Interest is payable semiannually on June 30 and December 31.

Question: Calculate the issue price of this bond.

Answer 1

Issue price of this bond is as calculated below:

Table value is based on:
n= 20
i= 2%
Cash Flow	Table Value	Amount	Present Value
Par (maturity value)	0.6730	300,000	201,891
Interest (semi-annual)	16.3514	15,000	245,272
Issue Price			447,163

Working:

PV Factor	Semi-annual year
0.98039	1
0.96117	2
0.94232	3
0.92385	4
0.90573	5
0.88797	6
0.87056	7
0.85349	8
0.83676	9
0.82035	10
0.80426	11
0.78849	12
0.77303	13
0.75788	14
0.74301	15
0.72845	16
0.71416	17
0.70016	18
0.68643	19
0.67297	20
16.35143