Question
A corporation issues for cash $15,000,000 of 9%, 30 year bonds, interest payable annually at a time when the market rate of interest is 8%.
A corporation issues for cash $15,000,000 of 9%, 30 year bonds, interest payable annually at a time when the market rate of interest is 8%. the straight-line method is adopted for the amortization of bond discount or premium. which of the following statements is true?
A. The amount of annual interest paid to bondholders decreases over the life of bonds
B. The amount of annual interest paid to bondholders is 1,200,000 annually
C. The amount of annual interest paid to bondholders increases over the life of bonds
D. The carrying amount decreases from its amount at issuance date to 15,000,000 at maturity
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