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galben [10]
3 years ago
11

Adonis Corporation issued 10-year, 7% bonds with a par value of $220,000. Interest is paid semiannually. The market rate on the

issue date was 6%. Adonis received $236,371 in cash proceeds. Which of the following statements is true?
a. Adidas must pay $220,000 at maturity plus 20 interest payments of $6,600 each.
b. Adidas must pay $236,371 at maturity and no interest payments.
c. Adidas must pay $220,000 at maturity plus 20 interest payments of $7,700 each.
d. Adidas must pay $220,000 at maturity and no interest payments.
e. Adidas must pay $236,371 at maturity plus 20 interest payments of $7,700 each.
Business
1 answer:
san4es73 [151]3 years ago
8 0

Answer:

The answer is C

Explanation:

The interest payment is semiannual, meaning it pays interest twice in a year.

Adonis corporation issued a 10-year bond. Since the interest payment is paid twice a year, the number of periods the interest will paid is 20 times(10 years x 2).

And interest to paid is:

$220,000 x 7%

Annual interest paid is $15,400

Since it is semiannual, interest payment will be $7,700($15,400 ÷ 2)

The principal payment at maturity is $220,000. Par value means face value at maturity or principal value at maturity.

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3 years ago
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8 0
2 years ago
At December 31, 2020 Bramble Corp. had 298000 shares of common stock and 9800 shares of 6%, $100 par value cumulative preferred
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