1)On January 1, 2015, Frontier World issues $39.9 million of 7% bonds, due in 10
ID: 2448383 • Letter: 1
Question
1)On January 1, 2015, Frontier World issues $39.9 million of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride.
if the market rate is 6%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1)(Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Enter your answers in dollars not in millions. Round "Market interest rate" to 1 decimal place.)
Bonds Characteristics Amount
Face Amount $39,900,000
Interest payment ??
market interest rate ??
periods to maturity ??
issue price ??
2) The bonds will issue at (chose one)
3) If the market rate is 7%, calculate the issue price. ****SAMe numbers, but the market rate was changed from 6 to 7%). How much will it be?
Bonds Characteristics Amount
Face Amount $39,900,000
Interest payment ??
market interest rate ??
periods to maturity ??
issue price ??
4)
The bonds will issue at(choose one)
face amount?
a premium?
or a discount?
2) The bonds will issue at (chose one)
A Discount A Premium Face amountExplanation / Answer
1)On January 1, 2015, Frontier World issues $39.9 million of 7% bonds, due in 10
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