Homework Answers
Semi annual interest payment = 380,000 x 9% x 6/12
= $17,100
Present value of principal to be received at the maturity = Par value of bonds x Present value factor ( r%,n)
= 380,000 x Present value factor (5%, 20)
= 380,000 x 0.37689
= 143,218
Present value of interest to be received periodically over the terms of the bonds = Interest x present value annuity factor (r%,n)
= 17,100 x Present value annuity factor (5%,20)
= 17,100 x 12.46221
= $213,104
Issue price of bond = Present value of principal to be received at the maturity+Present value of interest to be received periodically over the terms of the bonds
= 143,218+213,104
= $356,322
Note: Exact answer may slightly differ due to rounding off and factor value considered
Kindly comment if you need further assistance. Thanks‼!
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