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On January 1, a company issues bonds dated January 1 with a par value of $230,000. The bonds mature in 3 years. The contract rate
On January 1, a company issues bonds dated January 1 with a par value of $230,000. The bonds mature in 3 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8%. Using the present value factors below, the issue (selling) price of the bonds is:
n= | i= | Present Value of an Annuity (series of payments) | Present value of 1 (single sum) | |||||
3 | 7.0 | % | 2.6243 | 0.8163 | ||||
6 | 3.5 | % | 5.3286 | 0.8135 | ||||
3 | 8.0 | % | 2.5771 | 0.7938 | ||||
6 | 4.0 | % | 5.2421 | 0.7903 | ||||
Multiple Choice
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$223,968.
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$230,000.
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$236,032.
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$42,199.
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$181,769.
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