The Bluth Company issues $200,000 of bonds paying a stated interest rate of 7%. The...
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Accounting
The Bluth Company issues $200,000 of bonds paying a stated interest rate of 7%. The bonds are due in 5 years, with interest payable annually each year on Jan. 1^("st "). When the bonds are issued, other bonds of similar risk and maturity are paying 10% (i.e., the discount rate or market interest rate is 10% ). Calculate the issuance (selling) price of this bond: Present value of interest payments (annuity portion) (int. payment) * (factor) = Present Value of Bond Principal (single sum value) Total Present Value, or selling price Is the bond issued at a premium, discount, or face value (par)
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