Question: Red Corp issues $1,000,000, 8% five year bonds with interest paid semiannually. The current market rate of interest is 10%. Required: Compute the price of

Red Corp issues $1,000,000, 8% five year bonds with interest paid semiannually. The current market rate of interest is 10%.

Required:

Compute the price of the bond

Compute the discount/premium

Record the issuance of the bonds

Record the first interest payment including straight line amortization.

After 2 years, the company redeems the bonds at $1,040,000. Record the transaction.

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