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Hopkins Company is planning to issue $460,000 of 5%, 15-year bonds payable to borrow for a major expansion. The owner, John Hopkins, asks your advice
Hopkins Company is planning to issue $460,000 of 5%, 15-year bonds payable to borrow for a major expansion. The owner, John Hopkins, asks your advice on some related matters Read the requirements * Requirements - XL value Junt price 1. Answer the following questions: a. At what type of bond price will Hopkins Company have total interest expense equal to the cash interest payments? b. Under which type of bond price will Hopkins 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 Hopkins Company expect for the bonds? 2. Compute the price of the bonds if the bonds are issued at 93 3. How much will Hopkins Company pay in interest each year? How much will Hopkins Company's interest expense be for the first year? (Assume the straight-line method is used.) Junt price terest expense be for the first year? (For this used.) Print Done (Round your answers to the nearest whole dollar) Assuming that the straight-line method is used, Hopkins Company's interest expense will be $ for the first year
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