Keller Company issued $1,000,000, 8%, 7 year bonds with interest payable semiannually when the yield rate was 8%. The bonds issued at

Question

Quizplus · Accepted Answer

In this case, Keller Company is issuing bonds with a face value of $1,000,000 and a coupon rate of 8%. The bonds are to pay interest semiannually, which means interest payments will be made twice a year. The yield rate in the market is also 8%, which matches the coupon rate.
Since the coupon rate (8%) is equal to the yield rate (8%), the bonds will be issued at par value. This means that the price at which the bonds are sold will be equal to their face value.
Therefore, the correct answer is:
b. $1,000,000
The bonds will be issued at their face value because the coupon rate and the market yield rate are the same. There is no need for time value of money tables in this case because the bonds are issued at par when the rates match.

Keller Company Issued $1,000,000, 8%, 7 Year Bonds with Interest