On January 01, 2009 Roberts Inc. issued $2 million face amount of 10-year 10% coupon rate bonds when market interest rates were 12%. The bonds pay interest annually and mature on Dec. 31, 2018.
a. Using the present value tables the appendix at the end of the book or your calculators), calculate the proceeds (issue price) of Drennen's bonds on January 1, 2009, assuming that the bonds were sold to provide a market rate of return to the investor: