On January 1, a Company Issues Bonds Dated January 1

question 47

Multiple Choice

On January 1, a company issues bonds dated January 1 with a par value of $200,000. The bonds mature in 3 years. The contract rate is 4%, and interest is paid semiannually on June 30 and December 31. The market rate is 5%. Using the present value factors below, the issue (selling) price of the bonds is: $\begin{array}{llll}&&\text { Present Value of an }\\n=&i=&\text { Annuity }&\text { Present value of } \mathbb{\$1}\\3 & 4.0 \% & 2.7751 & 0.8890 \\6 & 2.0 \% & 5.6014 & 0.8880 \\3 & 5.0 \% & 2.7232 & 0.8638 \\6 & 2.5 \% & 5.5081 & 0.8623\end{array}$

• A)$172,460.
• B)$194,492.
• C)$22,032.
• D)$205,607.
• E)$200,000.

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