Question: A bond payable is dated January 1, 2016, and is issued on that date. The face value of the bond is $120,000, and the face

A bond payable is dated January 1, 2016, and is issued on that date. The face value of the bond is $120,000, and the face rate of interest is 6%. The bond pays interest semiannually. The bond will mature in five years.

Required:

a.) What will be the issue price of the bond if the market rate of interest is 6% at the time of issuance?

b.) What will be the issue price of the bond if the market rate of interest is 10% at the time of issuance?

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