Question: Pharoah Products Ltd . issued $ 3 . 1 4 million of 5 % , 5 - year bonds on January 1 , 2 0

Pharoah Products Ltd

.

issued $

3.14

million of

5 %, 5 -

year bonds on January

1, 2024 .

The bonds were dated January

1

and pay interest annually. There is no collateral secured against the bonds and Pharoah Products may buy back the bonds at any time. The market interest rate was

6 %

for these bonds. Pharoah has a calendar year end.

Factor tables for Present Value of

1

and Present Value of an Annuity of

1

are shown in the screenshot.

.)

Calculate the price of the bonds.

(

For calculation purposes, use

5

decimal places as displayed in the factor table provided. Round answer to

0

decimal places

)

.)

Record the bond issue on January

1, 2024 .

Pharoah Products Ltd . issued $ 3 . 1 4 million

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