Accounting for bonds using amortized cost measurement based on the historical market interest rate. O’Brien Corporation issues $8,000,000 face value, 8% semiannual coupon bonds maturing in 20 years. The market initially prices these bonds to yield 6% compounded semiannually O’Brien Corporation accounts for these bonds using amortized cost measurement based on the historical market interest rate.

a. Compute the issue price of these bonds.

b. Compute the interest expense on these bonds for the first six months.

c. Compute the interest expense on these bonds for the second six months.

d. Compute the carrying value of these bonds at the end of the second six-month period.

e. Use present value computations to verify the carrying value of the bonds at the end of the second six-month period as computed in part d above.