To the nearest dollar, what is the issue price of the bonds?
A)$200,000
B)$217,060
C)$229,440
D)$251,181

Question

Quizplus · Accepted Answer

The issue price of the bonds can be calculated using the present value formula: PV = PMT * (1 - 1/(1+r)^n) / r + FV/(1+r)^n
where PV is the present value or issue price of the bonds, PMT is the annual coupon payment, r is the annual interest rate, n is the number of years to maturity and FV is the face value or par value of the bonds.
Substituting the given values:
PV = 10,000 * (1 - 1/(1+0.06)^15) / 0.06 + 200,000/(1+0.06)^15
PV = 217,059.96
Rounding to the nearest dollar, the issue price of the bonds is $217,060. Therefore, the best choice is B.

To the Nearest Dollar, What Is the Issue Price of the Bonds