On July 1, 2010, Brower Industries issues $8,000,000 of 5-year, 11% bonds at an effective interest rate of 12% receiving $7,705,595. Interest on the bonds is payable semiannually on December 31 and June 30.
Q: Compute the price of $7,705,595 recieved for the bonds by using the tables of present value. Find the present value of the face amount and the present value of the semi-annual interest payments.The answer is: Present value of the face amount- $4,467,158 and the Present value of the semi-annual interest payments is $3,238,437.