2.

12A. On December 31, 2018, when the market interest rate is 10%, Armstrong Corporation issues $200,000 of 9%, 4-year bonds payable. The bonds pay interest semiannually. Determine the present value of the bonds at issuance. (Click the icon to view Present Value of $1 table.) 3 (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) 5 (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Start by calculating the present value of the principal. (Enter factor amounts to three decimal places, X.XXX.) Factor = PV of principal Value 200000 x Now calculate the present value of the stated interest. (Enter factor amounts to three decimal places, X.XXX.) ( Value X Factor PV of stated interest Semiannual interest rate % ) )x = = Finally, calculate the present value of bonds payable. PV of principal + PV of stated interest = PV of bonds payable