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Sand Explorers issues bonds due in 10 years with a stated interest rate of 7% and...

Sand Explorers issues bonds due in 10 years with a stated interest rate of 7% and a face value of $220,000. Interest payments are made semi-annually. The market rate for this type of bond is 6%. 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) (Use appropriate factor(s) from the tables provided.)

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Answer #1

Issue price of the bonds = Present value of interest at 3%, 20 years + Present value of maturity amount at 3%, 20 years

= 220000*7%*6/12*14.877 + 220000*0.5537

= $236367

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