California co issued 200 bonds at a stated rate of 6, Ask an Expert

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California Co. issued 200 bonds at a stated rate of 6% interest, with a principal amount of $1,000. The bonds are dated January 1, 2012, and are issued on that date. The bond pays interest semiannually. The bond will mature in five years.

REQUIRED:

1. What is the total amount of interest will California pay on July 1, 2012?

2. How many interest payments will California pay over the life of these bonds?

3. What will be the issuance price of the bond if the market rate of interest is 6% at the time of issuance?

4. If the market rate is 10% at the time of issuance, will the bonds sell at a premium or discount?

5. What will be the issuance price of the bond if the market rate of interest is 10% at the time of issuance?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9955691

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