Ask Question
16 September, 15:36

Sand Explorers issues bonds due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually. The market rate for this type of bond is 8%. Using present value tables, calculate the issue price of the bonds.

+1
Answers (1)
  1. 16 September, 18:41
    0
    The issue price of the bonds is $186412.10.

    Explanation:

    Price of bond = coupon*PVIFA (n, i) + FV * PVIF (n, i)

    = 7000*PVIFA (20, 4%) + 200000*PVIF (20, 4%)

    = 7000*13.5903 + 200000*0.4564

    = $186412.10

    Therefore, the issue price of the bonds is $186412.10.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Sand Explorers issues bonds due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers