A bond with a face value of $50,000 was issued for $46,750 on January 1, 2014.

The Coupon rate of interest was 8% a year and the market rate of interest was 10%

when the bond was issued. There was no issue cost for the bond. Cash interest is

paid annually. How much interest will be paid in cash on December 31, 2014?

1. $4,000

2. $5,000

3. $3,740

4. $4,675

6 . LF Corporation issued $400,000 (Face value) of 15 year bonds on January 1 with a stated interest rate per year of 8%. The bond pays cash interest biannually on June 30 and December 31. If the market interest rate is 6% at the time bonds are issued, what will be the issue price of bonds? Assume there is no issue cost incurred for these bonds. Choose the nearest amont.

1. $478,406

2. $399,992

3. $400,000

4. $632,205