Question - On January 1, 2017 Lance Co. issued five-year bonds with a face value of $840,000 and a stated interest rate of 8% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%.
Present value table factors are:
Present value of 1 for 7 periods at 10% - 0.51316
Present value of 1 for 7 periods at 8% - 0.58349
Present value of 1 for 10 periods at 5% - 0.61391
Present value of 1 for 14 periods at 4% - 0.57748
Present value of an ordinary annuity of 1 for 7 periods at 10% - 4.86842
Present value of an ordinary annuity of 1 for 7 periods at 8% - 5.20637
Present value of an ordinary annuity of 1 for 10 periods at 5% - 9.89864
Present value of an ordinary annuity of 1 for 14 periods at 4% - 10.56312
Calculate the issue price of the bonds.