Question: A company issued 5%, 20-year bonds with a face amount of $80 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell?

answer following:

1.What is the amount of interest paid semiannually?

2.At what price did the bond sell?

3.Record the journal entry on date of issuance.

4.Prepare a table showing interest expense, discount or premium amortization, unamortized discount or premium at end of period, and book value at end of period.

a.Please do so for periods 1 and 2

b. Please prepare two separate tables, one for straight line and one for effective interest.

c.Instead of a table, you may present the same information as it would appear on the balance sheet and income statement (if you choose this option, please include all of the italicized items above).

5.Draw a graph showing the changes in book value from issuance to maturity (see page 798).

a.Prepare one graph for effective interest and another for straight line.