Williams Company plans to issue bonds with a face value of $606,500 and a coupon rate of 6 percent. The bonds will mature in 10 years and pay interest semiannually every June 30 and December 31.

Williams Company plans to issue bonds with a face value of $606,500 and a coupon rate of 6 percent. The bonds will mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds are sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)

  

Determine the issuance price of the bonds assuming an annual market rate of interest of 6 percent.

Explanation:

Principal	$	606,500		×	0.55368	=	$	335,807
Interest	$	18,195	*	×	14.87747	=		270,696
		Issued Price					$	606,502**

   

*($606,500 × 0.06 × ½ year)

**Issue price should be exactly $606,500. The $2 difference is the result of rounding the present value factors at five digits. If you use Excel or a financial calculator to do this problem, the present value will equal exactly $606,500.