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A company issued $250,000, 8%, 5-year bonds on January 1, 2018. The market rate of interest was 5%. Interest on these bonds i

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Answer #1
a
Bonds were issued at premium
b
Selling price of the bond = $ 282471
Workings:
Amount PV factor 5% Present value
Annual interest 20000 4.32948 86589.53
Principal 250000 0.78353 195881.54
Total 282471.08
Annual interest 20000 =250000*8%
PV factor 5%:
Annual interest 4.32948 =(1-(1.05)^-5)/0.05
Principal 0.78353 =1/1.05^5
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