Question
On November 1, 2018, Ybarra Construction Company issued $200,000 of 5-year bonds that pay interest at an annual rate of 5%. The interest payments are
On November 1, 2018, Ybarra Construction Company issued $200,000 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 $200,000.
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%
ANSWER: 208983 correct
(ii) 6%
ANSWER: 191470 correct
b. Compute the market price of these bonds on November 1, 2020 assuming that the prevailing market interest rate at that time is 8%. Round answer to the nearest whole number.
CAN SOMEONE TELL ME THE ANSWER OF PART B. I tried 179,802 it was INCORRECT
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