Question: BA Corp issues 5.0%, 5-year bonds with a total face amount of $1,000,000. The market interest rate for bonds of similar risk and maturity is

BA Corp issues 5.0%, 5-year bonds with a total face amount of $1,000,000. The market interest rate for bonds of similar risk and maturity is 5.2%. Interest is paid semi-annually. DO NOT ROUND YOUR ANSWERS UNTIL YOU FULLY COMPLETE THE PROBLEM SET.

1. $___________How much will be paid in interest each interest payment?

2. $___________ (rounded to nearest dollar). What is the present value of the interest payments?

3. $___________ (rounded to nearest dollar). What is the issue price of the bond?

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