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Just can't figure out number 3 for 6% and 10%! Exercise 10-2 Issue Price Youngblood Inc. plans to issue $500,000 face value bonds with a
Just can't figure out number 3 for 6% and 10%!
Exercise 10-2 Issue Price
Youngblood Inc. plans to issue $500,000 face value bonds with a stated interest rate of 8%. They will mature in ten years. Interest will be paid semiannually. At the date of issuance, assume that the market rate is (a) 8%, (b) 6%, and (c) 10%.
Required:
For each market interest rate, answer the following questions. Refer to the tables above for present value factors. Round calculations and answers to the nearest whole dollar.
Market Rate | |||
8% | 6% | 10% | |
1. What is the amount due at maturity? | $ 500,000 | $ 500,000 | $ 500,000 |
2. How much cash interest will be paid every six months? | $ 20,000 | $ 20,000 | $ 20,000 |
3. At what price will the bond be issued? | $ 500,000 | $ | $ |
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