Chapter 10, Problem 20QS

a.

To determine

Identify 4.625% bonds were originally issued at a par value, what does the market price reveal about interest rate changes since issuance of bond.

b.

To determine

Explain the changes in the market rates since the issuance of these bonds affect the amount of interest expense reported on V’s income statement.

c.

To determine

Identify the cash amount Company V need to pay to repurchase the 4.625% bonds at the quoted market price of 111.67%.

d.

To determine

Identify the market price of the bonds sell on the due date in 2018, assuming that the 4.625% bonds remain outstanding until maturity.