Solved: Compute the price of the bonds on the issue date, Accounting Basics

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Compute the price of the bonds on the issue date

Problem:

On January 1, a company issues bonds with a par value of $300K. The bonds mature in 5 yrs and pay 8% annual interest each on June 30 and December 31. On the issue date, the market rate of interest is 6%. Compute the price of the bonds on their issue date.

- Present value of annuity for 10 periods at 3%=8.5302

- Present value of 1 due in 10 periods at 3%= 0.7441

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Accounting Basics: Compute the price of the bonds on the issue date

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