Sharmer Company Issues 5%, 5-Year Bonds with a Par Value

question 104

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: $$\begin{array}{l}\begin{array} { r l c c } &&\text { Present Value of an }\\n = & \mathrm { i } = & \text { Annuity } & \text { Present value of \$1 } \\5 & 5 \% & 4.3295 & 0.7835 \\10 & 3 \% & 8.7521 & 0.7812 \\5 & 6 \% & 4.2124 & 0.7473 \\10 & 3 \% & 85302 & 0.7441\end{array}\end{array}$$

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

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