On January 1, 2013, Learned, Inc., issued $15 million face amount of 20-year, 18

Question

On January 1, 2013, Learned, Inc., issued $15 million face amount of 20-year, 18% stated rate bonds when market interest rates were 20% The bonds pay interest semiannually each June 30 and December 31 and mature on December 31, 2032. Table 64. Table 6-5 (Use appropriate factor irom the table provided.) 4 value: 0.60 points Required a. Calculate the proceeds (issue price) of Learned, Inc's, bonds on January 1, 2013, assuming that the bonds were sold to provide a market rate of return to the investor (Round your answer to the nearest whole dollar amount. (e.g., 32)) roceeds

Explanation / Answer

Proceeds of bonds =15000000(pvif20%,20)+ 15000000*.18/2(pvifa10%,40) =13,533,142

Assets Cash Premium on bond payable Stock holder equity Net income 1350000 -8175 1341825

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