To calculate the cash proceeds from the issuance of bonds at a specified price, you need to multiply the face value of the bonds by the price at which they are issued, expressed as a percentage.
In this case, the face value of the bonds is $210,000, and they are issued at 106, which means 106% of the face value.
Here’s how to calculate it:
- Convert the percentage to a decimal: 106% = 106/100 = 1.06
- Multiply the face value by this decimal:
\[ \text{Cash proceeds} = \text{Face value} \times \text{Issuance price} \]
\[ \text{Cash proceeds} = 210,000 \times 1.06 = 222,600 \]
The amount of cash proceeds from the bond issuance is $222,600.