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Fox Co.issued $100,000 of ten-year, 10% bonds that pay interest semiannually.The bonds are sold to yield 8%.
-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 answer choices are correct.

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Fox Co.issued $100,000 of ten-year, 10% bonds that pay interest semiannually.The bonds are sold to yield 8%.
-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 answer choices are correct.

Quizplus · Accepted Answer

The bonds pay interest semiannually, so the interest rate per period is 4% (8% annual yield divided by 2), and there are 20 periods (10 years times 2). The correct step is to multiply the semiannual interest payment ($10,000) by the present value of an annuity table value for 20 periods at 4%.

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