Nike issued 20-year, 8% bonds with a par value of $700,000. Interest is paid sem

ID: 2488717 • Letter: N

Question

Nike issued 20-year, 8% bonds with a par value of $700,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Nike received $748,524 in cash proceeds. Which of the following statements is true?

Nike must pay $700,000 at maturity and no interest payments.

Nike must pay $700,000 at maturity plus 20 interest payments of $27,000 each.

Nike must pay $748,524 at maturity plus 40 interest payments of $28,000 each.

Nike must pay $700,000 at maturity plus 40 interest payments of $28,000 each.

Nike must pay $748,524 at maturity and no interest payments.

Explanation / Answer

Answer: Nike must pay $700,000 at maturity plus 40 interest payments of $28,000 each.

Explanation:

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Nike issued 20-year, 8% bonds with a par value of $700,000. Interest is paid sem

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