Question
Two different bond issuances are listed here with interest payments made semiannually: Bond Face Value Stated Interest Rate Effective Interest Rate Term A $100,000 6%
Two different bond issuances are listed here with interest payments made semiannually:
Bond Face Value Stated Interest Rate Effective Interest Rate Term
A $100,000 6% 8% 10yrs
B $100,000 9% 6% 10yrs
a. Compute the proceeds of each bond issuance. (Remember that interest rates provided are annual rates.)
b. For each bond, indicate whether the balance sheet value of the bond liability will increase, decrease, or remain constant over the life of the bond.
c. For each bond, indicate whether the interest expense recognized each period will increase, decrease, or remain constant over the life of the bond
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