Question: Echo Industries Echo Industries received authorization on December 31, 2010, to issue $7,000,000 face value of 8%, 10-year bonds. The interest payment dates are June

Echo Industries Echo Industries received authorization on December 31, 2010, to issue $7,000,000 face value of 8%, 10-year bonds. The interest payment dates are June 30 and December 31. All the bonds were issued on January 1, 2011, at which time similar bonds were trading in the marketplace at 10%.

Review the information about Echo Industries. REQUIRED:

A. How much cash will investors receive on June 30, 2011? B. What is the market rate for these bonds? C. How many interest payments will investors receive over the life of the bond? D. Will the bond be sold at a premium or discount? E. What will the issue price be for the bonds? (Show calculations to receive partial credit.)

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