On January 1, 2020, DFC Co. issued five-year bonds with a face value of $ 460,000 and a stated interest rate of 12% payable semiannually on every July 1 and January 1, beginning from July 1, 2020. The market rate of interest for bonds of similar risk is 10%.Present value table factors are:
Present value of 1 for 5 periods at 10%.62092
Present value of 1 for 5 periods at 12%.56743
Present value of 1 for 10 periods at 5%.61391
Present value of 1 for 10 periods at 6%.55839
Present value of an ordinary annuity of 1 for 5 periods at 10%3.79079
Present value of an ordinary annuity of 1 for 5 periods at 12%3.60478
Present value of an ordinary annuity of 1 for 10 periods at 5% 7.72173
Present value of an ordinary annuity of 1 for 10 periods at 6%7.36009
- Calculate the issue price of the bonds.