Use the following to answer questions 11 – 15 AL issues 4.0%, 20-year bonds with a face amount of $1,000,000 for $986,529.23. The market interest rate for bonds of similar risk and maturity is 4.1%. Interest is pa annually. 11. $ Determine the interest payment. (rounded to nearest dollar). Determine interest expense for the first interest 12. $ payment. :11 1.
Use the following to answer questions 11 – 15 AL issues 4.0%, 20-year bonds with a face amount of $1,000,000 for $986,529.23. The market interest rate for bonds of similar risk and maturity is 4.1%. Interest is pa annually. 11. $ Determine the interest payment. (rounded to nearest dollar). Determine interest expense for the first interest 12. $ payment. :11 1.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Need answer for 12,16
Transcribed Image Text:Use the following to answer questions 11 – 15
AL issues 4.0%, 20-year bonds with a face amount of
$1,000,000 for $986,529.23. The market interest rate for
bonds of similar risk and maturity is 4.1%. Interest is paid
annually.
11.
$
Determine the interest
рayment.
12.
$
(rounded to nearest dollar).
Determine interest expense for the first interest
раyment.
13.
What will happen to interest expense each interest
payment? (Increase, decrease, remain constant)
What will happen to the bond liability (carrying
value) each interest payment? (Increase, decrease, remain
constant).
14.
15.
$
How much will the company pay out
when the bonds mature in 20 years (assume all interest
payments have already been paid)?
(rounded to nearest dollar) A ten year
16. $
bond issue with a face amount of $100,000 bears interest
at the rate of 5.0%. The current market rate of interest is
4.90%. Determine the issue price of this annual bond.
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