Sonic Drive-Ins borrowed money by issuing $5,500,000 of 8% bonds payable at 90.5

Question

Sonic Drive-Ins borrowed money by issuing $5,500,000 of 8% bonds payable at 90.5. Requirements How much cash did Sonic receive when it issued the bonds payable? How much must Sonic pay back at maturity? How much cash interest will Sonic pay each six months? Requirement 1. How much cash did Sonic receive when it issued the bonds payable? Sonic received $ 4,977,500 when the bonds payable were issued. Requirement 2. How much must Sonic pay back at maturity? At maturity, Sonic must pay back $ 5500000. Requirement 3. How much cash interest will Sonic pay each six months? Sonic will pay interest of $ each six months.

Explanation / Answer

Answer:Requirement 3:

Interest=5500000*8%*6/12=220000

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