Question

James Corporation is planning to issue bonds with a face value of $508,500 and a coupon rate of 6 percent. The bonds mature in 7 years and pay interest semiannually every June 30 and December 31. All of the bonds will be sold on January 1 of this year. (FV of $1, PV of $1, FV of $1, an PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.) Required: Compute the issue (sales) price on January 1 of this year for each of the following independent cases:

Answer 1

Answer:

The solution according to the given query is summarized in the explanation segment below.

Explanation:

Given:

Face value,

= $508,500

Coupon rate,

= 6%

Bonds mature in years,

= 7

Now,

(a)

Issue price will be:

= $508500\times 0.75788+15255\times 12.10626$

= $385381.98+184680.99$

= $570,063$ ($)

(b)

Issue price will be:

= $508500\times 0.66112+15255\times 11.29607$

= $336179.52 + 172321.55$

= $508,501$ ($)

(c)

Issue price will be:

= $508500\times 0.55839+15255\times 10.39090$

= $283941.32 +158513.18$

= $442,454$ ($)