Trew Company plans to issue bonds with a face value of $908,000 and a coupon rat

Question

Trew Company plans to issue bonds with a face value of $908,000 and a coupon rate of 6 percent. The bonds will mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds are sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount.)

Determine the issuance price of the bonds assuming an annual market rate of interest of 8.0 percent.

Explanation / Answer

Amount PV factor Present value Semi-annual interest 27240 13.59033 370201 Principal 908000 0.45639 414402 Issue price 784603 Issuance price of the bonds = $784603 Note: Final answr might vary +1 due to rounding off

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