Question

Oriole Company issued $108,000 of ten-year, 10% bonds on January 1, 2018 that pay interest semiannually. The bonds were sold, and the first bond payment is due on the day that the bond sale was recorded. The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to multiply the face value by the factor found on the a. ___________________________________________________ table, b. at the intersection where n = ________ and c. i = _______%.

Answer 1

Ans:

Face Value : $108,000

n = 20 (10 years into semiannualy)

i = 4% (8% / 2)

To find out the the issue price of the bonds :

One step in calculating the issue price of the bonds is to multiply the face value by the factor found on the a PV Factor or (Present Value Factor) table,

At the Intersection where ;

n = 20

i = 4%

By using these value we get the present value of Face Value of Bonds to be received at maturity at Market Rate of Interest.

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