On January 1, 2018, frontier world issues $40.5million of 7% bonds due in 10 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 barbecue all in one ride.

2-a. If the market rate is 7%, calculate the issue price. (FV of $1. PV of $1. EVA of $1, and PVA of $10 place.) Bond Characteristics Amount $ 40,500,000 Face amount Interest payment Market interest rate Periods to maturity Issue price 2-b. The bonds will issue at O A Premium O Face amount O A Discount