Issue Price Youngblood Inc. plans to issue $500,000 face value bonds with a stated interest rate of

Question:

Issue Price Youngblood Inc. plans to issue $500,000 bonds with a stated interest rate of 8%. They will mature in ten years. Interest will be paid semiannually. At the date of issuance, assume that the market rate is
(a) 8%,
(b) 6%, and
(c) 10%.

Required
For each market interest rate, answer the following questions:
1. What is the amount due at maturity?
2. How much cash interest will be paid every six months?
3. At what price will the bond be issued?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...