Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 15

Computing Bond Issue Proceeds and Issue Price
Your company plans to issue bonds later in the upcoming year. But with the economic uncertainty and varied: interest rates, it Is not clear how much money the company will receive when the bonds are issued. The company is committed to issuing 2,000 bonds, each of which Will have a face value of $1,000, a stated interest rate of 8 percent paid annually, and a period to maturity of 10 years.
Required:
1. Compute the bond issue proceeds assuming a market interest rate of 8 percent. (When computing proceeds, round the present value of the face amount and the annual interest payment to the nearest hundred dollars,) Also, express the bond issue price as a percentage by comparing the total proceeds total to the total face value.
2. Compute the bond issue proceeds, assuming a market interest rate of 7 percent. (When computing proceeds, round the present value of the face amount and the annual interest payment to the nearest hundred dollars,) Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value.
3. Compute the bond issue proceeds assuming a market interest rate of 9 percent (When computing proceeds, round the present value of the face amount and the annual interest payment to the nearest hundred dollars.) Also, express the bond issue price as a percentage by comparing the total proceeds to the total face value.