[Thrillk1]

Can anyone help please?

On Jan 1 a company issues bonds with a par value of $300,000. The bonds mature in 5 years and pay 8% annual interest each June 30 and Dec 31. On the issue date, the market rate of interest is 6%. Compute the price of the bonds on the issue date. The following information is taken from present value tables:

Present Value of annuity for 10 periods at 3%... 8.5302
Present Value of annuity for 10 periods at 4%... 8.1109
Pressent value of 1 due in 10 periods at 3%... 0.7441
Pressent value of 1 due in 10 periods at 4%... 0.6756

[Wondergirl]

Is this homework?

[Thrillk1]

This is an example that I need to figure out and study.

[Wondergirl]

This is an example that I need to figure out and study.

Then I will not do your work for you.

Do you have any idea how to begin?

[Thrillk1]

I kind of came up with these solutions so can you tell me if I'm close or not? For 8.5302 I came up with a price of $255.906. For 8.1109 I came up with a price $243.327. For 0.7441 I came up with $22,223 and for 0.6756 I came up with $20,268. I need to know if I'm on the right track or not. I'm not asking for anyone to "just do it" like Nike. Lol

[helemuo]

Bonds Selling price= present value of the principal + present value of the interest payments
Present value of $300,000 ten periods at 3%=300,000x0.74409=$223,227
present value of $12,000 annuity ten periods=12000x8.530203=$102,362
Selling price of bonds $325,589
Bonds sold at premium:325,589-$300,000=$25,589
Annual interest 8%x300,000x6/12=$12,000

[Thrillk1]

Thanks man! I re-did the problem and came close to this as well. Later!