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What will be the issue price of the bonds

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Reference no: EM131607992

Problem -

Lopes Inc. issued bonds with a face value of $300,000 on January 1, Year1. The bonds have a 10 year maturity. The bonds will pay annual interest at 5% at the end of every year. On the date the bonds were issued, the market rate of interest was 4%. What will be the issue price of the bonds?

A. $202,668

B. $276,834

C. $300,000

D. $318,630

E. $324,332

Will the bond in the immediately preceding problem be issued at a premium ,discount, or face value.  (If you are unsure of the math in the first question, this is a chance to get some credit just by looking at the circumstances in the problem.)

1. A. Face Value

2. B. Discount

3. C. Premium

Reference no: EM131607992

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