Rodgers Equipment Company sold a ten-year, 6% bond issue at 102 ½. Rodgers received proceeds of $256,250 from the sale of these bonds. Calculate the face amount of these bonds.
What will be an ideal response?
$256,250 = 1.025(face amount)
Face amount = $256,250 ÷ 1.025 = $250,000
Bonds issued at 102 1/2 are issued at 102.5% of their face value. The issue price of $256,250 is equal to the face value times 102.5%.
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