1. Amiga Inc. issued $ 100,000, 7% semi-annual, 5-year bonds. The market rate at the time of issue was 7.5%. Using effective interest method, the present value of the bond is

a

$ 97,945

b

$ 95,568

c

$ 96,963

d

$ 98,903

2. Amiga Inc. issued $ 100,000, 7% semi-annual, 5-year bonds. The market rate at the time of issue was 7.5%. Using effective interest method, the carrying value of the bond after paying the fifth semi-annual interest would be

a

$ 95,968

b

$ 97,946

c

$ 98,879

d

$ 100,000

3. Amiga Inc. issued $ 100,000, 7% semi-annual, 5-year bonds. The market rate at the time of issue was 7.5%. Using effective interest method, the total interest cost that would be charged to P&L over 5-years is

a

$ 35,000

b

$ 37,500

c

$ 37,053

d

$ 28,745

4. On January 1, 2019, when the market rate was 8%, Valtra Corporation issued $800,000, 10%, 10-year bonds. Interest is payable semiannually on July 1 and January 1. The bonds were issued for $908,732.

Amount of Interest Expense charged to P&L for the sencond interest payment would be (using effective interest emthod)

a

36349.28

b

36202.97

c

36051.09

d

35893.13

5. On January 1, 2019, when the market rate was 8%, Valtra Corporation issued $800,000, 10%, 10-year bonds. Interest is payable semiannually on July 1 and January 1. The bonds were issued for $908,732.

Total effective interest that would be charged to P&L over 10 years would be (using effective interest)

a

640000

b

800000

c

691268

d

108732