On December 31, 2008, University Theatres issued $500,000 face value of bonds. The stated rate is 6

Question:

On December 31, 2008, University Theatres issued $500,000 face value of bonds. The stated rate is 6 percent, and interest is paid semiannually on June 30 and December 31.

The bonds mature in 10 years.

a. Assuming the market rate of interest is 4 percent calculate at what price the bonds are issued.

b. Assuming the market rate of interest is 8 percent calculate at what price the bonds are 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...