On January 1, 2021, Bishop Company issued 10% bonds dated January 1, 2021, with a face...

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On January 1, 2021, Bishop Company issued 10% bonds dated January 1, 2021, with a face amount of $39 million. The bonds matur

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Answer 1

Answer #1

Answer: Price of the Bonds: $ 34,526,731

Working:

Present value of interest payments	$ 22,366,346
[$39,000,0005%7.4694 PV annuity factor (6%, 10 years, semi annual bond)]
Present value of the face value	$ 12,160,384
[$ 39,000,000 x 0.8929 PV ordinary factor (6%, 10 years)]
Issue Price of Bonds	$ 34,526,731

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Answer 2

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