Question: Julie s Cleaning Service issued 25 000 worth of 10 year bonds at

Julie’s Cleaning Service issued $25,000 worth of 10-year bonds at 105. The bonds have a stated rate of 9%.

1. Was the market interest rate at the time of issue higher or lower than 9%? How do you know?
2. What were the proceeds from the bond issue?
3. Will the interest expense each period be higher or lower than the interest payment?
4. Will the book value of the bonds be higher or lower than $25,000 after five years?

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  • CreatedSeptember 01, 2014
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