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Tire Corporation is issuing $400,000 of 10%, 5-year bonds when potential bond investors want a...

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Accounting

Tire Corporation is issuing $400,000 of 10%, 5-year bonds when potential bond investors want a return of 12%. Interest is payable semiannually.

1) Calculate the present value of the Principal.

2) Calculate the present value of Interest Payments.

3) What is the selling price of the bond?

4) Did the bond sell at face value, discount, or a premium?

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