On January 1, a company issues bonds dated January 1 with a par value of $200,000. The bonds mature in 3 years. The contract rate is 4%, and interest is paid semiannually on June 30 and December 31. The market rate is 5%. Using the present value factors below, the issue (selling) price of the bonds is: n= i= Present Value of an Annuity(series of payments) Present value of 1(single sum)3 4.0% 2.7751 0.88906 2.0% 5.6014 0.88803 5.0% 2.7232 0.86386 2.5% 5.5081 0.8623
A. $172,460.
B. $22,032.
C. $200,000.
D. $194,492.
E. $205,607.
Answer: D
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