A 25-year bond issue of 4,800,000 and bearing interest at 3% payable annually is sold to yield 2.6% compounded semi-annually. What is the issue price of the bonds? The purchase price of the bond is $ (...)

A 25-year bond issue of 4,800,000 and bearing interest at 3% payable annually is sold to yield 2.6% compounded semi-annually. What is the issue price of the bonds? The purchase price of the bond is $ (...)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2PA: On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The...

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

Question

A 25-year bond issue of 4,800,000 and bearing interest at 3% payable annually is sold to yield 2.6% compounded semi-annually. What is the issue price of the bonds?
The purchase price of the bond is $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

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