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Ultimate Butter Popcorn issues 6%, 20-year bonds with a face amount of $53,000. The market interest rate for bonds of similar
On January 1, 2021, Corvallis Carnivals borrows $10,000 to purchase a delivery truck by agreeing to a 6%, three-year loan wit
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Answer #1

Issue price of bond = present value of principal value on bond + present value of interest on bond
= ($53000 x 0.30656) + ($1590 x 23.11477)
= $16247.68 + 36752.4843
= $53,000

therefore, the issue price = $53000

where,
(1)

face amount = $53000
Coupon rate = 6%/2 = 3% semiannually
Annual interest on bond = $53000 x 3% = $1590
(2)
Market interest rate = 6%/2 = 3% semiannually
Time period = 20 x 2 = 40
Therefore,
PVF(3%, 40) = 0.30656
PVAF(3%, 40) = 23.11477

Note: As per HOMEWORKLIB POLICY, only one question is allowed to answer at a time, so here first question is being answered :

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