ACC 304 All Assignments ACC 304 All Assignments | Page 27

(c)
Book value per share of common stock
$
per share
(d)
Payout ratio of common stock
%
(e)
Return on common stock equity
%
2) On January 1, 2015, Piper Co. issued ten-year bonds with a face
value of $3,000,000 and a stated interest rate of 10%, payable
semiannually on June 30 and December 31. The bonds were sold to
yield 12%. Table values are:
Present value of 1 for 10 periods at 10% .386
Present value of 1 for 10 periods at 12% .322
Present value of 1 for 20 periods at 5% .377
Present value of 1 for 20 periods at 6%
.312
Present value of annuity for 10 periods at 10% 6.145
Present value of annuity for 10 periods at 12% 5.650
Present value of annuity for 20 periods at 5% 12.462
Present value of annuity for 20 periods at 6% 11.470
3)
Calculate the issue price of the bonds.