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VIC Enterprises issues $500,000 of bonds paying a stated interest rate of 8%. The bonds are due in 10 years, with interest payable annuallyeach year

VIC Enterprises issues $500,000 of bonds paying a stated interest rate of 8%. The bonds are due in 10 years, with interest payable annuallyeach year on Jan. 1st. When the bonds are issued, other bonds of similar risk and maturity are paying 11% (i.e. the discount rate or market interest rate is 11%).

Calculate the issuance (selling) price of this bond:

Present value of interest payments (annuity portion)

_______ (int. payment) * _______(factor)_ =

Present Value of Bond Principal (single sum value)

500,000 (principal) * ________(factor)_=

Total Present Value, or selling price

Is the bond issued at a premium, discount, or face value (par)?

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