Park Corporation issued a ten-year $10,000,000 bond that had an 8 percent face interest rate that is paid semi-annually when the market interest rate was 6 percent.What are the proceeds generated by this bond issue?

Question

Quizplus · Accepted Answer

To determine the proceeds of a bond issue, you need to calculate the present value of the bond's future cash flows, which include both interest payments and the face value payment at maturity. Using a financial calculator or Excel, the present value of the bond's future cash flows at a 6% interest rate is $11,487,747. This is the amount Park Corporation would receive in exchange for issuing the bond. Therefore, the correct answer is C.

Park Corporation Issued a Ten-Year $10,000,000 Bond That Had an 8