Another step in calculating the issue price of the bonds is to
A) multiply $10,000 by the table value for 10 periods and 10% from the present value of an annuity table.
B) multiply $10,000 by the table value for 20 periods and 5% from the present value of an annuity table.
C) multiply $10,000 by the table value for 20 periods and 4% from the present value of an annuity table.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

The correct step in calculating the issue price of bonds involves determining the present value of the bond's future cash flows, which include both the periodic interest payments (using the present value of an annuity table) and the principal repayment at maturity (using the present value of a single sum table). The specific periods and rates (e.g., 10 periods at 10%, 20 periods at 5%, or 20 periods at 4%) depend on the bond's terms and cannot be determined as correct without additional context. Therefore, without specific details about the bond's interest rate, maturity, and payment frequency, none of the provided options can be universally correct.

Another Step in Calculating the Issue Price of the Bonds