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On January 1, THE Corporation issues bonds with a par value of $500,000. The bonds are issued at par, mature in 4 years, and pay
On January 1, THE Corporation issues bonds with a par value of $500,000. The bonds are issued at par, mature in 4 years, and pay 8% interest. Interest payments are made semiannually on June 30 and December 31. How much interest does the company pay in cash to bondholders every six months? How much interest does the company pay in cash over the life of the bond? If the bonds sell at Discount, how will this affect the amount of interest recognized over the life of the bond? (Click to select) If the bonds sell at a Premium, will the carrying value on January 1 be more or less than $500,000? (Click to select)
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