Assume that on January 1, 2010 a company issues $20,000 of bonds due in five years with
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Assume that on January 1, 2010 a company issues $20,000 of bonds due in five years with a stated rate of interest of 7 percent when the market
(effective) rate of interest is 6 percent. Also assume that that interest is payable semiannually. If the present value interest factor of a lump sum
(n = 10, i = 6 percent) is 0.744 and the present value interest factor of an annuity (n = 10, i = 6 percent) is 8.530, what are the total proceeds from the sale of the bonds?
A. $20,000 B. $20,851 C. $19,149 D. None of the above
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