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Bonds and Issue Price

On January 1, 2007 Kiner Co. issued five-year bonds with a face value of $400,000 and a stated interest rate of 12% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%. Present value table factors are:

Present value of 1 for 5 periods at 10% .62092
Present value of 1 for 5 periods at 12% .56743
Present value of 1 for 10 periods at 5% .61391
Present value of 1 for 10 periods at 6% .55839
Present value of an ordinary annuity of 1 for 5 periods at 10% 3.79079
Present value of an ordinary annuity of 1 for 5 periods at 12% 3.60478
Present value of an ordinary annuity of 1 for 10 periods at 5% 7.72173
Present value of an ordinary annuity of 1 for 10 periods at 6% 7.36009

Calculate the issue price of the bonds.

Solution Summary

This solution calculates the issue price of several bonds with a given PV and ordinary annuity.

$2.19