Compute the market price of these bonds on November

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Question - On November 1, 2018, Ybarra Construction Company issued $200,000 of 5-year bonds that pay interest at an annual rate of 5%. The interest payments are due every six months (that is, the interest is compounded semi-annually). At the end of the five-year period, Ybarra must pay the bond holders a balloon payment of $200,000.

Required -

a. What would the issue price of the bonds be if the prevailing interest rate is?

b. Compute the market price of these bonds on November 1, 2020 assuming that the prevailing market interest rate at that time is 8%.

Reference no: EM133021056

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