A corporation issues $40,000,000 of 6% bonds to yield an effective interest rate of 8%. a. Was

Question:

A corporation issues $40,000,000 of 6% bonds to yield an effective interest rate of 8%.

a. Was the amount of cash received from the sale of the bonds more or less than $40,000,000?

b. Identify the following amounts related to the bond issue:

(1) Face amount,

(2) Market rate of interest,

(3) Contract rate of interest, and

(4) Maturity amount.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...