Question 4. (TCO D) On January 1, 2011, Piper Co. issued 10-year
bonds with a face value of $1,000,000 and a stated interest rate of
10%, payable semiannually on June 30 and December 31. The
bonds were sold to yield 12%. Table values are:
Present value of 1 for 10 periods at 10%
.386
Present value of 1 for 10 periods at 12%
.322
Present value of 1 for 20 periods at 5%
.377
Present value of 1 for 20 periods at 6%
.312
Present value of annuity for 10 periods at 10%
6.145
Present value of annuity for 10 periods at 12%
5.650
Present value of annuity for 20 periods at 5%
12.462
Present value of annuity for 20 periods at 6%
11.470
Instructions:
- Calculate the issue price of the bonds.