Price Enterprises invested in the bonds of Greater Glouster on January 1,2015.These 10-year,$100,000 bonds pay interest of 3% every June 30 and December 31.The effective rate of interest for similar bonds on January 1 was 4%.What is the purchase price of these bonds?

Question

Quizplus · Accepted Answer

The purchase price of the bonds is calculated using the present value of the bond's cash flows, which include the present value of the interest payments and the present value of the principal amount, both discounted at the effective interest rate of 4%. The correct calculation results in a purchase price of $91,824.

Price Enterprises Invested in the Bonds of Greater Glouster on January