Cory Company needs to raise about \($500,000\) to finance the expansion of its office building. It is considering three alternative loan arrangements:

• Alternative A: Issue a \($500,000,\) 20-year bond with an interest rate of 10%.
• Alternative B: Issue a \($700,000,\) 20-year bond with an interest rate of 6%.
• Alternative C: Issue a \($400,000,\) 20-year bond with an interest rate of 12%.

Each bond pays interest annually. The market interest rate for bonds of this risk and duration is 9%, and the company needs to raise the money on January 1, 2008.
Required:
1. What is the issue price of each bond?
2. How much cash would the company have to pay in 2008 for each bond?
3. For each alternative, how much interest expense would it record in 2009 and in 2014?
4 . For each alternative, how much interest expense would Cory Company record over the loan’s entire 20-year life?
5. For each alternative, how much cash would Cory Company pay to bondholders over the loan’s entire 20-year life?
6. If Cory Company's marginal tax rate is 40%, which alternative do you recommend? Why?