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Texxon Corporation issued $500,000 of 8%, 10-year bonds. Interest is paid semiannually. Assume that the market rate for similar investments is 6 percent. What is
Texxon Corporation issued $500,000 of 8%, 10-year bonds. Interest is paid semiannually. Assume that the market rate for similar investments is 6 percent.
- What is the semi-annual cash payment amount for this bond issue?
a. $40,000
b. $30,000
c. $15,000
d. $20,000
- What is the present value (issue price) of this bond issue at the market rate of interest?
a. $587,798
b. $523,642
c. $574,540
d. $568,720
- How much bond interest expense should be recorded on the first semi-annual interest payment date?
a. $45,963.20
b. $17,236.20
c. $22,981.60
d. $34,472.40
- These bonds would be issued at a premium (i.e., your answer to #2 should be more than $500,000). What amount of premium will be amortized on the first semi-annual interest payment date?
a. $1,490.80
b. $3,727.00
c. $1,863.50
d. $2,763.80
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