Ask Question
21 July, 14:45

Sand Explorers issues bonds due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually. The market rate for this type of bond is 8%. Using present value tables, calculate the issue price of the bonds.

+4
Answers (1)
  1. 21 July, 15:13
    0
    The issue price of the bonds is $186412.10.

    Explanation:

    Price of bond = coupon*PVIFA (n, i) + FV * PVIF (n, i)

    = 7000*PVIFA (20, 4%) + 200000*PVIF (20, 4%)

    = 7000*13.5903 + 200000*0.4564

    = $186412.10

    Therefore, the issue price of the bonds is $186412.10.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Sand Explorers issues bonds due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers