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Chilliwack Manufacturing Inc. has $280,000 of 10% debenture bonds outstanding. The bonds were issued at 102 in 2017 and mature in 2037 Requirements 1. How
Chilliwack Manufacturing Inc. has $280,000 of 10% debenture bonds outstanding. The bonds were issued at 102 in 2017 and mature in 2037 Requirements 1. How much cash did Chilliwack receive when it issued these bonds? 2. How much cash in total will Chilliwack pay the bondholders through the maturity date of the bonds? 3. Take the difference between your answers to Requirements 1 and 2. This difference represents Chilliwack's total interest expense over the life of the bonds. (Challenge) 4. Compute Chilliwack's annual interest expense by the straight-line amortization method. Multiply this amount by 20. Your 20-year total should be the same as your answer to Requirement 3. (Challenge) Requirement 1. How much cash did Chilliwack receive when it issued these bonds? Chilliwack Manufacturing Inc. received $at bond issuance. Requirement 2. How much cash in total will Chilliwack pay the bondholders through the maturity date of the bonds? Chilliwack Manufacturing Inc. will pay the bondholders through the maturity date of the bonds. Requirement 3. Take the difference between your answers to Requirements 1 and 2. This difference represents Chilliwack's total interest expense over the life of the bonds. (Challenge) The difference between your answers to Requirements 1 and 2 is Requirement 4. Compute Chilliwack's annual interest expense by the straight-line amortization method. Multiply this amount by 20. Your 20-year total should be the same as your answer to Requirement 3. (Challenge)
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