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On January 1, 2017, Mermaid Inc. issued 10-year bonds with a face amount of 40,000,000 and a contract rate of 8% payable annually on January
On January 1, 2017, Mermaid Inc. issued 10-year bonds with a face amount of 40,000,000 and a contract rate of 8% payable annually on January 1. The effective-interest rate on the bonds is 10%. Present value factors are as follows:
At 8% At 10%
PV of 1 for 10 periods 0.463 0.386
PV of an ordinary annuity if 1 for 10 periods 6.710 6.145
Total issue price of the bonds was?
(a)40,000,000
(b)36,800,000
(c)35,104,000
(d)39,200,000
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