Question

On January 1, Applied Technologies Corporation (ATC) issued $550,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 12 percent. When the bonds were issued, the market interest rate was 12 percent. The bonds pay interest once per year on December 31. Required: 1. Determine the price at which the bonds were issued and the amount that ATC received at issuance. 2.

Answer 1

Answer:

$550,000

Explanation:

Data provided in the question

Issued amount = $550,000

Time period = 10 years

Stated interest rate = 12%

Market interest rate = 12%

Based on above information, as we can see that the stated interest rate is equal to market interest rate i.e 12% which reflects that it issued at par i.e face value

So in this case, the amount received at issuance is equal to the issued amount i.e $550,000