Question

On January 1, a company issues bonds dated January 1 with a par value of $210,000. The bonds mature in 3 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9%. Using the present value factors below, the issue (selling) price of the bonds is: n= i= Present Value of an Annuity (series of payments) Present value of 1 (single sum) 3 8.0% 2.5771 0.7938 6 4.0% 5.2421 0.7903 3 9.0% 2.5313 0.7722 6 4.5% 5.1579 0.7679

          On January 1, a company issues bonds dated January 1 with a par value of $210,000. The bonds mature in 3 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9%. Using the present value factors below, the issue (selling) price of the bonds is:
n=  i=  Present Value of an Annuity (series of payments)  Present value of 1 (single sum)
3  8.0%  2.5771  0.7938
6  4.0%  5.2421  0.7903
3  9.0%  2.5313  0.7722
6  4.5%  5.1579  0.7679

On January 1, a company issues bonds dated January 1 with a par value of 210,000. The bonds mature in 3 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9%. Using the present value factors below, the issue (selling) price of the bonds is:
n= i= Present Value of an Annuity (series of payments) Present value of 1 (single sum)
3 8.0% 2.5771 0.7938
6 4.0% 5.2421 0.7903
3 9.0% 2.5313 0.7722
6 4.5% 5.1579 0.7679

Added by Cesar B.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Akash M

11/13/2023

Step 1

The par value of the bonds is $210,000 and the contract rate is 8%. Since interest is paid semiannually, the annual interest payment would be 8% of $210,000, which is $16,800. Therefore, the semiannual interest payment would be $16,800 divided by 2, which is Show more…

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On January 1, a company issues bonds dated January 1 with a par value of $210,000. The bonds mature in 3 years. The contract rate is 8% and interest is paid semiannually on June 30 and December 31. The market rate is 9%. Using the present value factors below, the issue (selling) price of the bonds is: n= i= Present Value of an Annuity (series of payments) Present value of 1 (single sum) 3 8.0% 2.5771 0.7938 6 4.0% 5.2421 0.7903 3 9.0% 2.5313 0.7722 6 4.5% 5.1579 0.7679