On January 1, 2013, Jason Company issued $5 million of 10-year bonds at a 10% stated interest rate to be paid annually. The following present value factors have been provided: Calculate the issuance price if the market rate of interest was 10%.
$\begin{array}{cccc}\text { Time Period } &\text { Interest } &\text { PV of } \$ 1 & \text { PV of a } \$ 1 \text { Annuity }\\hline
10 & 10 \% & .386 & 6.145 \
10 & 8 \% & .463 & 6.710 \
10 & 12 \% & .322 & 5.650
\end{array}$
A) $5,427,000.
B) $4,477,000.
C)$4,435,000.
D)$5,000,000.

Question

Quizplus · Accepted Answer

The issuance price of the bonds is equal to the face value of $5 million because the stated interest rate is equal to the market rate of interest (10%), meaning the bonds are issued at par.

On January 1, 2013, Jason Company Issued $5 Million of 10-Year