Clare co. issued $6 million of 12% bonds on 12/31/year 1, due on 12/31/year 6, with interest payable each December 31 and June 30, starting 6/30/year 2. The bonds were sold to yield 16%. 

1. What's the bonds issuing price? 

2. How much interest expense would Clare report for year 2? 

3. On Clare's 12/31/ year2 balance sheet, how would the bonds be reported?

4. Please answer question 1-3, now assuming the yield is 10% instead. 

5. Suppose Clare co. issued $6 million of 12% bonds on 12/1/year 1, due on 12/1/year 6, with interest payable each December 1 and June 1, starting 6/1/year 2; the bonds were sold to yield 10%. What's the bonds issuing price? How much interest expense would Clare report for year 1?

Answer rating: 100% (QA)

ANSWER 1 To calculate the issuing price of the bonds we need to determine the present value of the future cash flows associated with the bonds The cash flows consist of periodic interest payments and ... View the full answer