Haste Enterprises Issues 20-Year, $1,000,000 Bonds That Pay Semiannual Interest

Haste Enterprises issues 20-year, $1,000,000 bonds that pay semiannual interest of $40,000. If the effective annual rate of interest is 10%, what is the issue price of the bonds? Some relevant and irrelevant present value factors: * PV of ordinary annuity of $1: n = 20; i = 10% is 8.51356
**PV of $1: n = 20; i = 10% is 0.14864
* PV of ordinary annuity of $1: n = 40; i = 5% is 17.5909
**PV of $1: n = 40; i = 5% is 0.14205

A) $828,000.
B) $893,000.
C) $1,000,000.
D) $1,686,000.

Correct Answer:

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