Jakub Company is retooling its autmotive engine plant to produce electronic vehicles. To finance this retooling, Jakub issued $200 million of 8% bonds due in 10 years. The bonds pay semiannual interest, and Jakub uses the GAAP effective interest method to amortize bond premiums and discounts. As a result of favorable media, the bonds are sold to yield 7%.

a. show how you valued the bonds at their issue date

b. prepare a bond amortization table.

c. If the bonds were sold to 9% yield calculate the bond value at its issue date.