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Question On January 2, 2016, Garage Master Construction, Inc. issued $500,000, 10-year bonds for $57

Question On January 2, 2016, Garage Master Construction, Inc. issued $500,000, 10-year bonds for $57

On January 2, 2016, Garage Master Construction, Inc. issued $500,000, 10-year bonds for $574, 540. The bonds pay interest on June 30 and December 31. The face rate is 8% and the market rate is 6%. The interest expense on the bonds at June 30, 2016, is a. $2, 764. b. $17, 236. c. $20,000. d. $22, 764. A bond payable is dated January 1, 2016, and is issued on that date. The face value of the bond is $120,000, and the face rate of interest is 6%. The bond pays interest semiannually. The bond will mature in five years. (Table A-3 and A-4) Required: What will be the issue price of the bond if the market rate of interest is 6% at the time of issuance? What will be the issue price of the bond if the market rate of interest is 10% at the time of issuance?

 
manish jayant 22-Apr-2020

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