Kingbird Inc. issues $2,085,900 of 9% bonds due in 12 years with interest payable at yearend. The current market rate of interest for bonds of similar risk is 10%. Click here to view factor tables What amount will Kingbird receive when it issues the bonds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)
Amount received by Kingbird when bonds were issued?
Bonds issue price is calculated by ADDING the: 
Discounted face value of bonds payable at 'applicable' market rate of interest [Face value x PV Factor], and 
Discounted Interest payments amount (during the lifetime) at 'applicable' market rate of interest [Interest payment x PV Annuity factor] 
Working and Answer
Annual Rate  
Market Rate  10.0% 
Coupon Rate  9.0% 

Amount  PV factor  Present Values  
PV of Face Value of  $ 2,085,900.00  0.31863 [PV $1 at 12th period]  $ 664,630.32 
PV of Interest payments of  $ 187,731.00[ 2085900 x 9%]  6.81370 [PVA $1 at 12th period]  $ 1,279,142.71 
Issue Price of Bonds  $ 1,943,773.03 
Correct
Answer
Amount received when Bonds are issued = $
1,943,773
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