Skysong Corporation issues 470000 of 9 bonds due in 9 years

Skysong Corporation issues $470,000 of 9% bonds, due in 9 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%.

Compute the issue price of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Issue price of the bonds

$

Solution

Amount PV factor Present value Semiannual interest 21150 11.68959 247235 Principal 470000 0.41552 195294 Issue price of the bonds 442529