Question
Answer each of the questions in column 1 under three independent scenarios. All three use this information: On January 1, 2023, Microsoft issued a $500,000,
Answer each of the questions in column 1 under three independent scenarios. All three use this information: On January 1, 2023, Microsoft issued a $500,000, 5%, 20-year bond. Interest is payable on June 30 and December 31.
Show all calculations. Round numbers to the nearest dollar if necessary.
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| If the bond is issued at 100 | If the bond is issued at 96 | If the bond is issued At 104 |
| Is this bond issued at par, at a discount, or at a premium? |
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| Was the market rate of interest on each bond equal to, greater than or less than the market rate of interest on the date of issuance? |
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| What is the face amount of the bond? |
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| How much interest will be paid on each interest payment date? |
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| What is the total amount of interest payments for this bond? |
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| What is the total amount of interest expense on this bond? |
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| How much cash will be repaid at maturity?
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