Factors That Affect the Bond Issue Price

RIVERE ENTERPRISES is considering the issue of $115,000 face value, ten-year term bonds. The bonds will pay 6% interest each December 31. The current market rate is 6%; therefore, the bonds will be issued at face value.

2. For each situation in part (1), prove your statement by determining the issue price of the bonds given the changes in (a) and (b). Do not round intermediate computation and round your final answer to the nearest dollar. Here are some time value of money factors: Present value of an annuity, n-10,-7%, PV 7.02358 Present value of an annuity, n-20, 1-3%, PV-14.87747 Present value of a single amount, n-10, i-796, PV-0.50835 Present value of a single amount, n-20, 1-3%, pv-0.55368 Proof: Bond Price -51,382 X 8,114.4 X