Use the following information for questions 29 and 30:
Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%.
-One step in calculating the issue price of the bonds is to multiply the principal by the table value for
A) 10 periods and 10% from the present value of 1 table.
B) 20 periods and 5% from the present value of 1 table.
C) 10 periods and 8% from the present value of 1 table.
D) 20 periods and 4% from the present value of 1 table.

Question

Quizplus · Accepted Answer

The bonds pay interest semiannually, so the number of periods is doubled to 20, and the yield per period is halved to 4%. Therefore, the principal should be multiplied by the table value for 20 periods and 4% from the present value of 1 table.

Use the Following Information for Questions 29 and 30