A Company Issues 9%, 5-Year Bonds with a Par Value

question 230

Multiple Choice

A company issues 9%, 5-year bonds with a par value of $100,000 on January 1 at a price of $106,160, when the market rate of interest was 8%. The bonds pay interest semiannually. The amount of each semiannual interest payment is:

• A) $4,000.
• B) $4,500.
• C) $9,000.
• D) $8,000.
• E) $0.

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