On January 1, 2004, Grant Co. issued ten-year bonds with a face amount of $5,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows:
Present value of 1 for 10 periods 0.46 0.386
Present value of an ordinary annuity of 1 for 10 periods 6.71 6.145
The total issue price of the bonds was
The total issue price will be the present value of interest and principal discounted at the yield of 10%. The interest per year is ...
The solution explains how to calculate the present value of a bond issue