Adidas issued 10-year, 11% bonds with a par value of $270,000. Interest is paid

Question

Adidas issued 10-year, 11% bonds with a par value of $270,000. Interest is paid semiannually. The market rate on the issue date was 10%. Adidas received $286,827 in cash proceeds. Which of the following statements is True?

Adidas must pay $270,000 at maturity and no interest payments. Adidas must pay $286,827 at maturity and no interest payments. Adidas must pay $270,000 at maturity plus 20 interest payments of $13,500 each. Adidas must pay $286,827 at maturity plus 20 interest payments of $14,850 each. Adidas must pay $270,000 at maturity plus 20 interest payments of $14,850 each.

Explanation / Answer

Interest payment = 11%*270000/2 = 14850

Adidas must pay $270,000 at maturity plus 20 interest payments of $14,850 each.

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