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Enviro Company issues 10.00%, 10-year bonds with a par value of $420,000 and semiannual interest payments. On the issue date, the annual market rate for

Enviro Company issues 10.00%, 10-year bonds with a par value of $420,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.00%, which implies a selling price of 127 5/8. The straight-line method is used to allocate interest expense.

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