Determine the price of a $200,000 bond issue under each of the following independent assumptions. Maturity Interest Paid Stated Rate Effective Rate a) 10 years Annually 10% 12% b) 10 years Semiannually 12% 10% c) 20 years Semiannually 12% 12%

a) The effective rate is greater than the stated rate in this scenario, indicating that the bond was issued at a discount. To find the price of the bond, we must use the present value formula, which is: PV = FV / (1 + r)^n where PV is the present value of the bond, FV is the face value of the bond, r is the effective interest rate, and n is the number of years until maturity. Plugging in the values given, we get: PV = 200,000 / (1 + 0.12)^10 PV = $71,251.69 b) The effective rate is lower than the stated rate in this scenario, indicating that the bond was issued at a premium. Using the same formula as before: PV = 200,000 / (1 + 0.10/2)^(10*2) PV = $209,166.02 c) The effective rate is the same as the stated rate in this scenario, indicating that the bond was issued at par value (i.e. at face value). Again, using the same formula as before: PV = 200,000 / (1 + 0.12/2)^(20*2) PV = $200,000.00