answer 14-17

Use the following to answer questions 11 - 15 TR issues 8.0%, 20-year bonds with a face amount of $1,000,000 for $1,009,891.64. The market interest rate for bonds of similar risk and maturity is 7.9%. Interest is paid annually. 14. What will happen to the bond liability (carrying value) each interest payment? (Increase, decrease, remain constant). 15. $ How much will the company pay out when the bonds mature in 20 years (assume all interest payments have already been paid)? 16. $ (rounded to nearest dollar) A five year bond issue with a total face amount of $1,000,000 bears interest at the rate of 7.5%. The current market rate of interest is 7.6%. Determine the issue price of this annual bond. 17. Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each matures in 10 years. Bond X pays 7% interest while Bond Y pays 6% interest. The current market rate of interest is 6%. Which of the following is correct? a. Both bonds will sell for the same amount. b. Bond X will sell for more than Bond Y. Bond Y will sell for more than Bond X. d. Both bonds will sell at a premium. c