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On January 1 2015 Water Wonderland issues \$20 million of 8% bonds due in ten years

On January 1, 2015, Water Wonderland issues \$20 million of 8% bonds, due in ten years, with interest payable semiannually on June 30 and December 31 each year.

1.   If the market rate is 7%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

2.   If the market rate is 8%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

3.   If the market rate is 9%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.

139. Pizza Pier issues 7%, 10-year bonds with a face amount of \$80,000 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is also 7%.  Interest is paid semiannually on June 30 and December 31.

1.  Record the bond issue.

2.  Record the first interest payment on June 30, 2015.

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