Question
On January 1, 2020, Beck Co. issued (sold) ten-year bonds with a face amount of $3,000,000 and a stated interest rate of 10%. Interest is
On January 1, 2020, Beck Co. issued (sold) ten-year bonds with a face amount of $3,000,000 and a stated interest rate of 10%. Interest is payable semi-annually on January1 and July 1st of each year. The bonds were priced to yield 8% (market interest rate). Present value factors are as follows: At 4% At 8% At 10% Present value of $1 for 10 periods 0.6756 0.4630 0.3860 Present value of $1 for 20 periods 0.4564 0.2145 0.1486 Present value of an ordinary annuity of $1 for 10 periods 8.1109 6.7100 6.1450 Present value of an ordinary annuity of $1 for 20 periods 13.590 9.8181 8.5136
The total issue price of the bonds was a. $3,000,000. b. $3,402,,000. c. $2,760,000. d. $3,407,700.
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