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Company issues 5%, 5-year bonds with a par value of $1,000,000 and semiannual interest payments....

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Question

Accounting

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:

n=

i=

Present Value of an Annuity

Present value of $1

5

5

%

4.3295

0.7835

10

3

%

8.7521

0.7812

5

6

%

4.2124

0.7473

10

3

%

8.5302

0.7441

A) $957,355

B) $1,000,000

C) $1,250,000

D) $786,745

E) $1,213,255

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