Assume that the bonds in exercise 1 do not pay periodic interest and that the market rate of return on the date of issue was 5.50%.

1. At what price were the bonds issued?

2. What is the interest expense for the second year?

3. What is the carrying value of the bonds at the end of the seventh year?

Even value of bonds 200,000.00 End in 10.00 years interest payments per year 2.00 number of periods 20.00 nominal annual interest rate 6.50% semester interest rate 3.25 semi-annual market rate 8.30% semi-annual market rate 4.15% semiannual interest payment 6,500.00