4b)

On January 1, Briggs Corporation issued bonds with a face value of $900,000 and a stated interest rate of 8%. Briggs will pay the bondholders $36,000 in interest every six months, and repay the face value at the end of four years. The market rate of interest on the date of issue was 6%.

Additional information:

	PV of $1					PVA of $1
n / i	3%	4%	6%	8%		3%	4%	6%	8%
2	.94260	.92456	.89000	.85734		1.91347	1.88609	1.83339	1.78326
4	.88849	.85480	.79209	.73503		3.71710	3.62990	3.46511	3.31213
8	.78941	.73069	.62741	.54027		7.01969	6.73274	6.20979	5.74664

What was the market price of the bonds on the date of issue, January 1? (Round to nearest dollar.)

Choose the right answer below?

1. $780,764
2. $963,178
3. $894,064
4. $900,000