Brief Exercise G-15 Pharoah Company is about to issue $298,800 of 8-year bonds p

Question

Brief Exercise G-15

Pharoah Company is about to issue $298,800 of 8-year bonds paying an 9% interest rate, with interest payable semiannually. The discount rate for such securities is 10%.

Click here to view the factor table.

(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

In this case, how much can Pharoah expect to receive from the sale of these bonds? (Round answer to 0 decimal places, e.g. 2,575.)

Explanation / Answer

Issue price of bonds = Present value of interest+Present value of maturity

                                   = (298800*4.5%*10.83777)+(298800*0.45811)

Issue price of bonds = 282608

Pharoah can expect to receive $282608

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