Question

On January 1, 2021, Mania Enterprises issued 15% bonds dated January 1, 2021, with a face amount of $28 million. The bonds mature in 2033 (10 years). For bonds of similar risk and maturity, the market yield is 12%. 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: Determine the price of the bonds at January 1, 2021. (Enter your answer in whole dollars.)

Price of Bonds:

Answer 1

(note there will be slight difference in issue price calculation ,kindly use the factors as given
inn your question to get exact answer)
	Bond characterstics				Amount
1-a)	Principal				28,000,000
	interest				2,100,000
	Market interest rate				6%
	periods to maturity				20
	issue price				32,817,232	answer
	Calculation of bond issue price
	Where
	i=	6.00%
	t=	20
	principal		*	PV of $1 at 6% for 20 yrs =
	28,000,000		*	0.3118		=	8730400
	interest		*	PV of ordinary annuity at 6%=
	2100000		*	11.46992		=	24086832
	bond issue price						32817232