On January 1, a Company Issues 8%, 5-Year, $300,000 Bonds $3 \%$

question 146

Multiple Choice

On January 1, a company issues 8%, 5-year, $300,000 bonds that pay interest semiannually. On the issue date, the annual market rate of interest is 6%. The following information is taken from present value tables: Present value of an annuity for 10 periods at $3 \%$$\quad$$\quad$$\quad$ 8.5302
Present value of an annuity for 10 periods at $4 \%$$\quad$$\quad$$\quad$ 8. 1109
Present value of 1 due in 10 periods at $3 \%$$\quad$$\quad$$\quad$$\quad$$\quad$ 0.7441
Present value of 1 due in 10 periods at $4 \%$$\quad$$\quad$$\quad$$\quad$$\quad$ 0.6756 What is the issue (selling) price of the bond?

• A) $402,362
• B) $300,010
• C) $420,000
• D) $308,107
• E) $325,592

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