1. Terrapin, Inc. issues bonds with a par value of $20,000,000 on January 1, 2020. The bonds have an annual coupon rate of 6%, pay interest annually, and will mature in 7 years. If the market rate of interest on the bonds is 9% per year, then what is the annual interest expense that the company will report for the year ending December 31, 2024? [Note: the company uses the effective interest method of amortization.]

   	a.	$1,725,008
   	b.	$1,615,095
   	c.	$1,589,959
   	d.	$1,663,310
   	e.	$1,200,000

3.333 points

QUESTION 14

1. Terrapin, Inc. issues bonds with a par value of $20,000,000 on January 1, 2020. The bonds have an annual coupon rate of 6%, pay interest annually, and will mature in 7 years. If the market rate of interest on the bonds is 9% per year, then what is the carrying amount of the bonds at December 31, 2023? [Note: the company uses the effective interest method of amortization.]

   	a.	$20,000,000
   	b.	$18,481,223
   	c.	$18,065,172
   	d.	$18,944,533
   	e.	$18,841,623

3.333 points

QUESTION 15

1. Terrapin, Inc. issues bonds with a par value of $20,000,000 on January 1, 2020. The bonds have an annual coupon rate of 6%, pay interest annually, and will mature in 7 years. If the market rate of interest on the bonds is 9% per year, then what is the annual interest expense the company will report if it uses the straight-line method to amortize the bond discount?

   	a.	$1,625,055
   	b.	$1,528,221
   	c.	$1,415,224
   	d.	$1,200,000
   	e.	$1,631,396