MC Qu. 123 A company issued... A company issued 7.0%, 5-year bonds with a par va
ID: 2339248 • Letter: M
Question
MC Qu. 123 A company issued...
A company issued 7.0%, 5-year bonds with a par value of $160,000. The market rate when the bonds were issued was 8.0%. The company received $153,511.28 cash for the bonds. Using the effective interest method, the amount of interest expense for the second semiannual interest period is:
Multiple Choice:
$5,600.00.
$6,162.07.
$6,140.45.
$11,200.00.
$12,302.52.
MC Qu. 126 Adonis Corporation issued...
Adonis Corporation issued 10-year, 11% bonds with a par value of $210,000. Interest is paid semiannually. The market rate on the issue date was 10%. Adonis received $223,087 in cash proceeds. Which of the following statements is true?
Multiple Choice:
Adonis must pay $210,000 at maturity and no interest payments.
Adonis must pay $210,000 at maturity plus 20 interest payments of $11,550 each.
Adonis must pay $223,087 at maturity plus 20 interest payments of $11,550 each.
Adonis must pay $223,087 at maturity and no interest payments.
Adonis must pay $210,000 at maturity plus 20 interest payments of $10,500 each.
Explanation / Answer
Q123. Answer is $ 6162.07 Explanation: Amort Chart: Interest Cash Interest Discount Unamortized Carrying Value Period Interest Expenses Amortized Discount of bonds 0 6488.72 153511.3 1 5600 6140.45 540.45 5948.27 154051.7 2 5600 6162.07 562.07 5386.2 154613.8 Q.126. Answer is Adonis must pay $ 210000 at maturity plus 20 interest payment of $ 11550 each. Explanation: Cash interest for 20 periods = 210000*11%*6/12 = 11550
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