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    sparky08's Avatar
    sparky08 Posts: 1, Reputation: 1
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    #1

    Mar 30, 2008, 03:31 PM
    Accounting - Issuing Bonds
    A company issues bonds with a par value of $300,000 on their issue date The bonds mature in 5 years and pay 8% annual interest each June 30 and December 31. On the issue date, the market rate of interest is 6%.
    Compute the price of the bonds on their issue date. The following information is taken from present value tables:
    Present value of an annuity for 10 periods at 3% ………… 8.5302
    Present value of an annuity for 10 periods at 4% ………… 8.1109
    Present value of 1 due in 10 periods at 3% ……………….0.7441
    Present value of 1 due in 10 periods at 4% ……………….0.6756
    acctgwizard's Avatar
    acctgwizard Posts: 3, Reputation: 1
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    #2

    Jan 28, 2009, 12:30 AM

    present value of principal
    (300,000x.6756) 202,630
    present value of interest
    (300,000x4%x8.1109) 72,998
    PRICE OF BONDS 275,628
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