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Accounting Bond Price Issue Question
Hi, I am stuck on this and need some help with steps :
When Patey Pontoons issued 6.50% bonds on January 1, 2011, with a face amount of $560,000, the market yield for bonds of similar risk and maturity was 7.50%. The bonds mature December 31, 2014 (4 years). Interest is paid semiannually on June 30 and December 31. Question : 1.Determine the price of the bonds at January 1, 2011 My work : I did Interest : 18,200 x 6.87396 Principal : 560,000 x 0.75491 and got 550,376. This was wrong, I am confused on how to solve this since 7.5 / 2 = 3.75 is not found in the present value tables |
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