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22 Seaside issues a bond that has a stated interest rate of 9%, face amount of...

22 Seaside issues a bond that has a stated interest rate of 9%, face amount of $40,000, and is due in 8 years. Interest payments are made semi-annually. The market rate for this type of bond is 12%. What is the issue price of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Multiple Choice

  • $55,746.

  • $33,937.

  • $40,000.

  • $60,786.

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Answer #1

Issue price of bonds = Present value of interest+Present value of maturity value

= (40000*4.5%*10.106)+(40000*0.394)

Issue price of bonds = 33937

SO answer is b) $33937

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