Question
On January 1, 2014, Ellison Co. issued eight-year bonds with a face value of $3,000,000 and a stated interest rate of 6%, payable semiannually on
On January 1, 2014, Ellison Co. issued eight-year bonds with a face value of $3,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:
Present value of 1 for 8 periods at 6% .627
Present value of 1 for 8 periods at 8% .540
Present value of 1 for 16 periods at 3% .623
Present value of 1 for 16 periods at 4% .534
Present value of annuity for 8 periods at 6% 6.210
Present value of annuity for 8 periods at 8% 5.747
Present value of annuity for 16 periods at 3% 12.561
Present value of annuity for 16 periods at 4% 11.652
26. The present value of the principal is
a. $2,136,000.
b. $1,602,000.
c. $2,492,000.
d. $1,508,000.
27. The present value of the interest is
a. $1,048,680.
b. $1,398,240.
c. $1,390,400.
d. $1,307,320.
28. The issue price of the bonds is
a. $3,534,240.
b. $2,650,680.
c. $3,558,240.
d. $2,998,400.
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