Question 2:

On January 1, 2018, Bruiser and Marigold issued $100,000 maturity, 10-year, zero-coupon bonds for $21,455. The bonds compounded interest semiannually. What is the semi-annual yield rate on the bonds at the time of issuance? Show your calculation assumptions for partial credit.

Question 3:

On January 1, 2020, J. Butler, Inc. issued $300,000 of 4% coupon rate, 6-year bonds, yielding 2%. The bonds pay interest semiannually on June 30 and December 31. Round to the nearest dollar.

a. How will the bond be shown on the balance sheet right after the sale? For partial credit, show your calculation assumptions.

b. What is the interest expense that would be recognized in the first year of the bond? Show your calculations. Round to the nearest dollar.