Brief Exercise G-17 Sunland Company issued 10%, 8-year, $2,504,000 par value bon

Question

Brief Exercise G-17 Sunland Company issued 10%, 8-year, $2,504,000 par value bonds that pay interest semiannually on October 1 and April 1. The bonds are dated April 1, 2017, and are issued on that date. The discount rate of interest for such bonds on April 1, 2017, is 10%. Click here to view the factor table (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What cash proceeds did Sunland receive from issuance of the bonds? (Round answer to 0 decimal places, e.g. 125.) Cash proceeds from issuance of the bonds

Explanation / Answer

Semiannual interest on bond 125200 (2504000*5%) PV annuity n=16 i =5% 10.83777 PV of interest 1356889 Maturity value 2504000 PV $1 n=16 i =5% 0.45811 Pv of matrity value 1147107 Cash proceeds from issue of bond 2503996

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