Use the following to answer questions 16 20 (Round answers to the nearest dollar)

ELF issues 6.0%, 20-year bonds with a face amount of $100,000 for $100,575.83. The market interest rate for bonds of similar risk and maturity is 5.95%. Interest is paid annually.

16. $___________Determine the interest payment

17. $____________ (rounded to nearest dollar). Determine interest expense for the first interest payment.

18. What will happen to interest expense each interest payment?

increase

decrease

remain constant

19. What will happen to the bond liability (carrying value) each interest payment?

increase

decrease

remain constant

20. $___________How much will the company pay out when the bonds mature in 20 years (assume all interest payments have already been paid)?