Multiple Choice Question 62 On January 1 2017 Bonita Industr

Multiple Choice Question 62

On January 1, 2017, Bonita Industries issued eight-year bonds with a face value of $6,090,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:

The issue price of the bonds is

B.

D.

	Present value of 1 for 8 periods at 10%		0.467
	Present value of 1 for 8 periods at 12%		0.404
	Present value of 1 for 16 periods at 5%		0.458
	Present value of 1 for 16 periods at 6%		0.394
	Present value of annuity for 8 periods at 10%		5.335
	Present value of annuity for 8 periods at 12%		4.968
	Present value of annuity for 16 periods at 5%		10.838
	Present value of annuity for 16 periods at 6%		10.106

Solution

Amount PV factor Present value Semiannual interest 304500 10.106 3077277 Principal 6090000 0.394 2399460 Issue price 5476737 Option C is correct