When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

A) $321,970
B) $1,000,000
C) $943,494
D) $621,524

Question

Hinal Patel · Accepted Answer

Final Answer : C, Explanation :  To find the selling price of the bond issue, we need to use the present value formula:P = PMT x (1 - 1/(1+r)^n)/r + FV/(1+r)^nwhere:P = selling pricePMT = annual paymentr = market rate of interestn = number of periodsFV = future valuePlugging in the values, we get:P = $110,000 x (1 - 1/(1+0.12)^10)/0.12 + $1,000,000/(1+0.12)^10P = $943,494Therefore, the selling price of the bond issue was $943,494. Choice C is correct.

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

A) $321,970
B) $1,000,000
C) $943,494
D) $621,524

Definitions

Learning Objectives

Learning Objectives

Related questions

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue wasA) $321,970B) $1,000,000C) $943,494D) $621,524

Definitions

Learning Objectives

Learning Objectives

Related questions

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

A) $321,970
B) $1,000,000
C) $943,494
D) $621,524