Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-LaFluer Corporation issued $400,000 of 15-year bonds on January 1. The bonds pay interest on January 1 and July 1 with a stated rate of 8 percent. If the market rate of interest at the time the bonds are sold is 6 percent, what will be the issuance price (approximate) of the bonds?

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-LaFluer Corporation issued $400,000 of 15-year bonds on January 1. The bonds pay interest on January 1 and July 1 with a stated rate of 8 percent. If the market rate of interest at the time the bonds are sold is 6 percent, what will be the issuance price (approximate) of the bonds?

Quizplus · Accepted Answer

The issuance price of the bonds is calculated by finding the present value of the bond's future cash flows (interest payments and principal repayment) discounted at the market rate of 6%. The present value of the interest payments and the principal repayment at maturity will be higher than the face value due to the lower market rate compared to the stated rate.

Use the Present Value and Future Value Tables Included in Appendix