Precision Inc. issued $900,000 of 10-year, 5% bonds on January 1, 2021. Interest is to be paid

Question:

Precision Inc. issued $900,000 of 10-year, 5% bonds on January 1, 2021. Interest is to be paid semi-annually. The market interest rate was 6%.

a. What is the face value of the bond? When will this be paid?

b. What interest rate will be used to determine the price of the bond?

c. How many interest payments will be made over the life of the bond?

d. What will the interest payments be every six months?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

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