A company wants to issue $600,000 of 10-year,6.8% bonds,with interest paid annually at the end of the year.The market rate of interest is currently 5%.What information is needed to determine the selling price?

Question

Quizplus · Accepted Answer

In order to determine the selling price of the bonds, we need to know the face value of the bonds ($600,000), the stated rate of interest (6.8%), the market rate of interest (5%), and the bond's life (10 years). The bond rating and purpose of the issue are not necessary to calculate the selling price.

A Company Wants to Issue $600,000 of 10-Year,6