Problem: On January 1, 2010, Lowry Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31. The bonds were sold to yield 10%. Table values are:
Present value of 1 for 10 periods at 8% 0.46319
Present value of 1 for 20 periods at 4% 0.45639
Present value of annuity for 10 periods at 8% 6.71008
Present value of annuity for 20 periods at 4% 13.59033
What should be the issue price of the bonds? Please provide a detailed, easy to understand calculation