Valuation of Bonds Hadley Cycle Corporation has plans for a major plant expansion and needs to raise additional capital to pay for the construction. Hadley is considering selling 12-year, 10 percent first mortgage bonds with a par value of $600,000. The bonds will pay interest twice each year.

a. Compute the amount of cash Hadley will receive if the bonds are sold at an effective interest rate of:

1. 10 percent.

2. 8 percent.

San | Ospercent

b. Prepare the journal entry Hadley would record at the time of sale under each of the three alternative yields.