Stech Co
Subject:AccountingPrice: Bought3
Stech Co. is issuing $6.5 million 12% bonds in a private placement on January 1, 2012. Each $1,000 bond pays interest semi-annually on June 30 and December 31 of each year. The bonds mature in ten years. At the time of issuance, the market interest rate for similar types of bonds was 8%. What is the expected selling price of the bonds?
I have to find:
Maturity Value of Bonds Payable:
Present Value of $6.5 million due in 10 years 8%, interest payable semi-annually:
Present Value of $390,000 interest payable semi-annually for 10 years at 8% annually:
Proceed from sale of bonds:
Premium on bonds payable = Selling Price of the Bond - Face Value:
