Homework Answers
Par value of bonds = $200,000
Semi annual interest payment = $7,000
Annual interest payment = 7,000 x 2
= $14,000
Stated annual interest rate = Annual interest payment/Par value of bonds
= 3.5%
First option is the correct option.
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When Patey Pontoons issued 10% bonds on January 1, 2021, with a face amount of $560,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (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.) Required: 1. Determine the price of the bonds...
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