Question

Everhart Company issues $15,000,000, 6%, 5-year bonds dated January 1, 2012 on January 1, 2012. The bonds pays interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?

a. $15,000,000
b. $15,649,482
c. $15,656,427
d. $15,651,924

Answer 1

The proceeds from the bond issue are $15,000,000.

Step-by-step explanation:

The proceeds from the bond issue can be calculated using the present value formula. In this case, the bonds are issued at a yield of 5%, which is the same as the market interest rate. So the present value of the bonds is equal to its face value.

Proceeds from the bond issue = Face value of the bonds = $15,000,000