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LaTanya Corporation is planning to issue bonds with a face value of $100 000 and...

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Accounting

LaTanya Corporation is planning to issue bonds with a face value of $100 000 and a coupon rate of 8 percent. The bonds mature in seven years. Interest is paid annually on December 31. All the bonds will be sold on January 1 of this year.

Required:

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

  1. Case A: Market interest rate (annual): 8 percent
  2. Case B: Market interest rate (annual): 6 percent
  3. Case C: Market interest rate (annual): 9 percent

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