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The face value of a bond is $72,000, its stated rate is 7%, and the term of the bond is five years. The bond pays

The face value of a bond is $72,000, its stated rate is 7%, and the term of the bond is five years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. Determine the present value of the bonds at issuance.

Present value of $1:

4%

5%

6%

7%

8%

5

0.822

0.784

0.747

0.713

0.681

6

0.790

0.746

0.705

0.666

0.630

7

0.760

0.711

0.665

0.623

0.583

8

0.731

0.677

0.627

0.582

0.540

9

0.703

0.645

0.592

0.544

0.500

10

0.676

0.614

0.558

0.508

0.463

Present value of ordinary annuity of $1:

4%

5%

6%

7%

8%

5

4.452

4.329

4.212

4.100

3.993

6

5.242

5.076

4.917

4.767

4.623

7

6.002

5.786

5.582

5.389

5.206

8

6.733

6.463

6.210

5.971

5.747

9

7.435

7.108

6.802

6.515

6.247

10

8.111

7.722

7.360

7.024

6.710

A. 69,112

B. 72,000

C. 51,560

D. 20,440

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