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 7 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 7 percent. These bonds will be issued for

Quizplus · Accepted Answer

The market rate of interest is lower than the coupon rate of 9%, which means that investors will be willing to pay more than the face value of the bond (which is $200,000) to receive the higher interest payments. Using the present value and future value tables, we can calculate that the present value of the bond payments is $232,302. This means that the bonds will be issued for more than $200,000.

Use the Present Value and Future Value Tables Included in Appendix