On January 1, 1996, ZZZ Corporation issued $100,000 in 5-year corporate bonds, with a coupon rate of 10%. At the time of issue, the market rate was 8%. ZZZ Corporation makes coupon payment at the end of each year.

1). How much is the cash proceed from the bond issuance?

2). Calculate the coupon payment, interest expense, and net book value of the bonds at the end of year 1996.

3). Calculate the coupon payment, interest expense, and net book value of the bonds at the end of year 1997.

4) If the coupon rate is 8% and the market rate is 10%, how would your answer to 1), 2), and 3) change?