On January 1, 2012, Frontier World issues $42 million of 8% bonds, due in 2 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride.

If the market rate is 6%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

If the market rate is 8%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price

If the market rate is 10%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

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