E$-$F:$12-21$

Ty Company is planning to issue $$520,000$ of $6\%,$ five$-$year bonds payable

to borrow for a major expansion. The owner, Fabina Tyler, asks your advice

on some related matters.

Requirements

Answer the following questions:

a$.$ At what type of bond price will Ty Company have total interest

expense equal to the cash interest payments?

b$.$ Under which type of bond price will Ty Company's total interest

expense be greater than the cash interest payments?

c$.$ If the market interest rate is $7\%,$ what type of bond price can Ty

Company expect for the bonds?

Compute the price of the bonds if the bonds are issued at $93.$

How much will Ty Company pay in interest each year? How much will Ty

Company's interest expense be for the first year?