Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-Flute Corporation issued $200,000, 10-year, 9 percent bonds at a time when the market rate of interest was 12 percent. These bonds will be issued for

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-Flute Corporation issued $200,000, 10-year, 9 percent bonds at a time when the market rate of interest was 12 percent. These bonds will be issued for

Quizplus · Accepted Answer

Since the market rate of interest is higher than the coupon rate on the bonds, the bonds will be issued at a discount. Therefore, the issue price will be less than the face value of $200,000. To determine the exact issue price, we need to calculate the present value of the bond's future cash flows using the market rate of interest.

Use the Present Value and Future Value Tables Included in Appendix