On December 31 2016 when the market interest rate is 10 Arno

On December 31, 2016, when the market interest rate is 10%, ArnoldArnold Corporation issues $$280,000 of 9%, 8-year bonds payable. The bonds pay interest semiannually. Determine the present value of the bonds at issuance

Solution

given fv= $280000, r=9, n=16

pv= fv/(1+r)ⁿ

pv=$280000 / (1+0.09)¹⁶

pv= $280000 / (3.970)

pv = 70529