8. Atwell Company is planning to issue $460,000 of 9%, ten year bonds payable to borrow for a major expansion. The owner, anthony atwell, asks your advice on some related matters.

Requirements:

a 1. Answer the following questions: At what type of bond price will Atwell Company have total interest expense equal to the cash interest payments? b. Under which type of bond price will Atwell Company's total interest expense be greater than the cash interest payments? If the market interest rate is 12%, what type of bond price can Atwell Company expect for the bonds? 2. Compute the price of the bonds if the bonds are issued at 87 3. How much will Atwell Company pay in interest each year? How much will Atwell Company's interest expense be for the first year? (Assume the straight-line method is used.) C