Chapter 6, Problem 6.18E

Price of a bond; interest expense

• LO6–9

On June 30, 2018, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2033 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2018.

Required:

1. 1. Determine the price of the bonds on June 30, 2018.
2. 2. Calculate the interest expense Singleton reports in 2018 for these bonds.