Enviro Company issues 10.50%, 10-year bonds with a par value of $430,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.50%, which implies a selling price of 127 7/8. The straight-line method is used to allocate interest expense.

1. Using the implied selling price of 127 7/8. what are the issuers cash proceeds from issuance of these bonds?

Cash proceeds

$549,863

2. What total amount of bond interest expense will be recognized over the life of these bonds?

Total Bond Interest Expense Over Life of Bonds:
Amount repaid:
20	payments of	$22,575	$451,500
Par value at maturity			430,000
Total repayments			881,500
Less amount borrowed (from part 1)
Total bond interest expense			$881,500