Kelly Industries issued 11% bonds, dated January 1, with a face value of $100,000 on January 1, 2018. The bonds mature in 2028 (10 years). Interest is paid semiannually on June 30 and December 31. For bonds of similar risk and maturity the market yield is 12%. What was the issue price of the bonds?

Question

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Semiannual: 11%/2 = 5.5%. 12%/2 = 6%. 11ea937b_35f7_6e5f_a419_7b7750ae76f3_TB2599_00 ^¥ 5.5% × $100,000 = $5,500. * PV of ordinary annuity of $1: n = 20; i = 6% **PV of $1: n = 20; i = 6%

Kelly Industries Issued 11% Bonds, Dated January 1, with a Face