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On November 1, 2015, Ybarra Construction Company issued $350,000 of 5-year bonds that pay interest at an annual rate of 5%. The interest payments are
On November 1, 2015, Ybarra Construction Company issued $350,000 of 5-year bonds that pay interest at an annual rate of 5%. The interest payments are due every six months (that is, the interest is compounded semi-annually). At the end of the five-year period, Ybarra must pay the bond holders a balloon payment of $350,000. a. What would the issue price of the bonds be if the prevailing interest rate is: Round answers to the nearest whole number. (i) 4%$ (ii) 6%$ b. Compute the market price of these bonds on November 1, 2017 assuming that the prevailing market interest rate at that time is 8%. Round answer to the nearest whole number. $
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