Question

Roman Destinations issues bonds due in 10 years with a stated interest rate of 5% and a face value of $570,000. Interest payments are made semi-annually. The market rate for this type of bond is 4%. Using present value tables, calculate the issue price of the bonds. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

A) 399,327

B) 527,600

C) 616,601

D) 570,000

Answer 1

Amount of interest (570000*5% *6/12) (A) P.V n = 20 1 = 2% (B) Present Value of Interest (A *B)=(C) PV of Face Value (570000*.67297) = (D) Issue Price of the Bonds (C+D) 14250 16.35143 233008 383593 616601 Answer C) $616,601