Adams company is planning to issue $460,000 of 6%, five-year bonds, payable to borrow for a major expansion. The owner, John Adams, asks for your advice on some related matter.

Requirement 1. Answer the following questions. At what type of bond price will ffidents Company have total interest expense equal to the cash a. interest payments? Under which type of bond price will dotounts Company's total interest expense be greater than the b. cash interest payments? If the market interest rate is 11%, what type of bond price can Adrafiff Company expect for the c. bonds? Requirement 2. Compute the price of the bonds if the bonds are issued at 49. The price of the 460000 bond issued at 89 Requirement 3. How much wiltidilisss Company pay in interest each year? How much will expense be for the first year? (For this scenario we are assuming that the 4600 monds are issued at Further assume that the straight-line method is used.) If the 460,0000 bonds are issued at 39,4603000 Company will pay this amount of interest each year (Round your answers to the nearest whole dollar.) Assuming that the straight-line method is used, Alolams Company's interest expense for the first year will be Requirements 1. Answer the following questions: a. At what type of bond price will Adams Company have total interest expense equal to the cash interest payments? b. Under which type of bond price will Adams Company's total interest expense be greater than the cash interest payments? c. If the market interest rate is 9%, what type of bond price can Adams Company expect for the bonds? 2. Compute the price of the bonds if the bonds are issued at 89 . 3. How much will Adams Company pay in interest each year? How much will Adams Company's interest expense be for the first year? (Assume the straight-line method is used.)