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Question - On January 1, 2017 Lance Co. issued five-year bonds with a face value of $840,000 and a stated interest rate of 8% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%.

Present value table factors are:

Present value of 1 for 7 periods at 10% - 0.51316

Present value of 1 for 7 periods at 8% - 0.58349

Present value of 1 for 10 periods at 5% - 0.61391

Present value of 1 for 14 periods at 4% - 0.57748

Present value of an ordinary annuity of 1 for 7 periods at 10% - 4.86842

Present value of an ordinary annuity of 1 for 7 periods at 8% - 5.20637

Present value of an ordinary annuity of 1 for 10 periods at 5% - 9.89864

Present value of an ordinary annuity of 1 for 14 periods at 4% - 10.56312

Calculate the issue price of the bonds.

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  • Category:- Accounting Basics
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