Question

On September 30, 2018, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $220 million. The bonds mature on September 30, 2038 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. ((FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
Determine the price of the bonds on September 30, 2018. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)
  

Answer 1

(note there will be slight difference in issue price calculation ,kindly use the factors as given
inn your question to get exact answer)
	Bond characterstics				Amount
1-a)	Principal				220,000,000
	interest				8,800,000
	Market interest rate				5%
	periods to maturity				40
	issue price				182,250,992
	Calculation of bond issue price
	Where
	i=	5.00%
	t=	40
	principal		*	PV of $1 at 5% for 40 yrs =
	220,000,000		*	0.14205		=	31251000
	interest		*	PV of ordinary annuity at 5%=
	8800000		*	17.15909		=	150999992
	bond issue price						182250992