Question

Ratioli Inc. is planning a $5,000,000 bond issue. The bonds will carry an 8 percent interest rate, pay interest semiannually, and mature in 10 years.
Required:
(a) If the market rate of interest at the date of issue is 6 percent, what will be the bond issue price? Does the bond sell at a premium or a discount?
(b) If the market rate of interest at the date of issue is 10 percent, what will be the bond issue price? Does the bond sell at a premium or a discount?
(c) Using your answer from part (b), how much premium or discount will be amortized each interest period?


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  • CreatedMarch 27, 2015
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