A company issues bonds with a par value of $200,000 on their issue date. The bonds mature in 10 years and pay a 10% annual contract rate of interest in semiannual payments. On the issue date, the market rate of interest is 14%.
A company issues bonds with a par value of $500,000 on their issue date. The bonds mature in 15 years and pay a 10% annual contract rate of interest in semiannual payments. On the issue date, the market rate of interest is 8%.