(Determining the proceeds from a bond, LO 3) On July 15, 2006, Dyce Inc. (Dyce)

will be making a $2,000,000 bond issue to public investors. The bond matures in five years on July 14, 2011, has a coupon rate of 8%, and pays interest annually on July 14. Indicate how much Dyce will receive in proceeds from its bond if the effective interest rate when the bond is issued is:

a. 7%

b. 8%

G2 9%