1) On January 1, 2016, Jason Company issued $5.06 million of 10-year bonds at a 10% coupon interest rate to be paid annually. The following present value factors have been provided: Time Period Interest PV of $ PV of an Annuity 10 10% .386 6.145 10 8% .463 6.710 10 12% .322 5.650 Calculate the issuance price if the market rate of interest was 10%.

A) $4,812,060.

B) $4,488,220.

C) $5,060,000.

D) $5,738,040.

2) Gammell Company issued $52,300 of 9% bonds with annual interest payments. The bonds mature in ten years. The bonds were issued at $49,150. Gammel Company uses the straight-line method of amortization. Which of the following statements is incorrect?

A) The annual interest expense exceeds the annual cash interest payment by $315.

B) The market rate of interest exceeded the coupon rate of interest when the bonds were issued.

C) The annual interest expense is $4,392.

D) The annual increase in the bond book value is $315.