On January 1, 2015, Vacation Destinations issues $40 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:

Required:
1. Were the bonds issued at face amount, a discount, or a premium?
2. What is the original issue price of the bonds?
3. What is the face amount of the bonds?
4. What is the stated annual interest rate?
5. What is the market annual interest rate?
6. What is the total cash paid for interest assuming the bonds mature in 10 years?

Transcribed Image Text:

Cash Paid for Interest Interest Expense Carrying Value Increase in Date 1/1/2015 6/30/2015 12/31/2015 ing Value $1,400,000 1,400,000 $1,491,277 1,494,928 91,277 94,928 $37,281,935 37,373,212 37,468,140