GMAT Corporation is planning to issue bonds with a face value of $259,000 and a coupon rate of 6 percent. The bonds mature in 5 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Determine the issuance price of the bonds assuming an annual market rate of interest of 8.0 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)
| Price of bond is the present value of cash flow from bond which is calculated as follows: | ||||||||||
| Issuance Price of the bonds | = | =-pv(rate,nper,pmt,fv) | Where, | |||||||
| = | $ 2,37,993 | pv | = | Present value of cash flow | = | ? | ||||
| rate | = | Discount rate | = | 4.00% | ||||||
| nper | = | Number of period | = | 10 | ||||||
| pmt | = | Coupon payment | = | $ 7,770 | ||||||
| fv | = | Face value | = | $ 2,59,000 | ||||||
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