A corporation issues $26,000,000 of 9% bonds to yield interest at the rate of 7%.

(a) Was the amount of cash received from the sale of the bonds greater or less than

$26,000,000?

(b) Identify the following amounts as they relate to the bond issue: (1) face amount, (2) market or effective rate of interest, (3) contract rate of interest, and

(4) maturity amount.

AppendixLO1