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Enchantment Corporation is planning to issue bonds with a face value of $400,000 and a...

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Accounting

Enchantment Corporation is planning to issue bonds with a face value of $400,000 and a coupon rate of 4 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. All of the bonds will be sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.

Required:

Compute the issue (sales) price on January 1 of this year for each of the following independent cases:

  1. Case A: Market interest rate (annual): 4 percent.
  2. Case B: Market interest rate (annual): 2 percent.
  3. Case C: Market interest rate (annual): 6 percent.

image

\begin{tabular}{|l|c|} \hline & Issue price \\ \hline a. Case A & \\ \hline b. Case B & \\ \hline c. Case C & \\ \hline \end{tabular}
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