Central College is about to issue $1 million of 10-year bonds that pay a 6% annual interest rate, with interest payable semi-annually.
Instructions
(a) Calculate the issue price of these bonds if the market interest rate is (1) 5%, (2) 6%, and (3) 7%.
(b) Calculate the interest expense for the first interest period if the market interest rate is
(1) 5%,
(2) 6%, and
(3) 7%.
(c) Calculate the interest payment if the market interest rate is
(1) 5%,
(2) 6%, and
(3) 7%.