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PRACTICE PROBLEM On January 1, Bob Inc. sells $50,000 worth of 10-year bonds. The bonds pay interest every six months (June 30 and December 31)

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PRACTICE PROBLEM On January 1, Bob Inc. sells $50,000 worth of 10-year bonds. The bonds pay interest every six months (June 30 and December 31) and carry a coupon rate of 6%. Just before the bonds were issued, the market rate of interest changed to 4%. (A) What is the present value of the FACE of the bonds? (B) What is the present value of the INTEREST payments? (C) How much cash will Bob Inc. receive upon issuance? (D) Journal the interest payment on June 30 using the effective interest method to amortize the discount or premium

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