Chapter $9$ Homework, Assignment #$2$

Saved

$16$

Part $2$ of $3$

$1$

points

eBook

Hint

References

$1$

Required information

Exercise $9-22($Algo$)$ Calculate the issue price of bonds $($LO$9-7)$

$[$The following information applies to the questions displayed below.$]$

On January $1,2024,$ Water World issues $$25\mathrm{.}9$ million of $6\%$ bonds, due in $20$ years, with interest payable semiannually on June $30$ and December $31$ each year. Water World intends to use the funds to build the world's largest water avalanche and the "tornado" $-$ a giant outdoor vortex in which riders spin in progressively smaller and faster circles until they drop through a small tunnel at the bottom.

Exercise $9-22($Algo$)$ Part $2$

$2-$a$.$ If the market rate is $6\%,$ calculate the issue price. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ and PVA of $$1)$

$2-$b$.$ Will the bonds issue at face amount, a discount, or a premium?

Complete this question by entering your answers in the tabs below.

Req $2$a

If the market rate is $6\%,$ calculate the issue price.$($FV of $$1,$ PV of $$1,$ FVA of $$1,$ and PVA of $$1)($Note: Use tables, Excel, or a financial calculator. Enter your answers in dollars not in millions $($i$.$e$.,$ $$5\mathrm{.}5$ million should be entered as $5,500,000).$

Round your final answers to the nearest whole dollar.$)$

$\backslash$table$[[$Bond Characteristics,Amount,$],[$Face amount,$$,25,900,000$