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QUESTION

Ryan Company issued bonds with a coupon rate of 8% and a face amount of $5,000. The bonds mature in 15 years.

Ryan Company issued bonds with a coupon rate of 8% and a face amount of $5,000. The bonds mature in 15 years. The market interest rate for bonds with the same degree of riskiness is 12% compounded semi-annually.These bonds were issued on January 1 of Year 1. Coupon payments are made every six months on June 30 and on December 31, so the first coupon payment was made on June 30 of Year 1. Ryan uses the effective-interest method on its books. What was the issuance price of these bonds on January 1 of Year 1? 

$5,000$1,778$2,276$3,624$3,638$2,748

Calculation of issue price of bondsface amount = $ 5000annual coupon rate = 8% but paid semi annuallyso semi annual coupon rate = 8%/2 = 4%semi annual coupon amount = $ 5000*4%= $ 200market...
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