Sharmer Company Issues 5%,5-Year Bonds with a Par Value of $1,000,000

question 66

Multiple Choice

Sharmer Company issues 5%,5-year bonds with a par value of $1,000,000 and semiannual interest payments.On the issue date,the annual market rate for these bonds is 6%.What is the bond's issue (selling) price,assuming the following factors:
$$\begin{array} { r l c c } &&\text { Present Value of an } \\ \mathrm {n} =& \mathrm { i } = & \text { Annuity } & \text { Present value of } \$ 1 \\5 & 5 \% & 4.3295 & 0.7835 \\10 & 3 \% & 8.7521 & 0.7812 \\5 & 6 \% & 4.2124 & 0.7473 \\10 & 3 \% & 8.5302 & 0.7441\end{array}$$

• A) $957,355
• B) $1,000,000
• C) $1,250,000
• D) $786,745
• E) $1,213,255

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