A company issued 10%, five-year bonds with a par value of $2,000,000, on January 1, 2014. Interest is to be paid semiannually each June 30 and December 31. The market interest rate was 8%, therefore, the bonds were sold at $2,162,290. The company uses the straight-line method of amortization.

what is the amount of cash interest paid every year:

Group of answer choices

$83,771

$100,000

$167,542

$200,000

Flag question: Question 2

From the group exercise, what is amount of premium amortization calculated for with every semiannual interest payment

Group of answer choices

$16,229

$83,771

$100,000

$146,061

Flag question: Question 3

Refer to the data provided in the group exercise. What do you expect the carrying value to be at the maturity date of the bonds

Group of answer choices

$0

$2,000,000

10%

8%

Flag question: Question 4

A bond sells at a discount when the:

Group of answer choices

Contract rate is above the market rate.

Contract rate is equal to the market rate.

Contract rate is below the market rate.

Bond has a short-term life.