Question

Bond Premium, Entries for Bonds Payable Transactions Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $30,700,000 of 10-year, 14% bonds at a market (effective) interest rate of 13%, receiving cash of $32,391,438. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

5. Compute the price of $32,391,438 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount	$
Present value of the semiannual interest payments	$
Price received for the bonds	$

Please fill in the blanks. THANKS

Answer 1

5
Present value of the face amount	8712660
Present value of the semiannual interest payments	23678778
Price received for the bonds	32391438
Workings:
	Amount	PV factor 6.5%	Present value
Semiannual interest	2149000	11.01851	23678778
Principal	30700000	0.28380	8712660
Total			32391438
Semiannual interest	2149000	=30700000*14%*6/12
PV factor 6.5%:
Semiannual interest	11.01851	=(1-(1.065)^-20)/0.065
Principal	0.28380	=1/1.065^20