Issue PriceWhitworth International plans te issue $500,000 face value bonds with a stated interest rate of 10%. They will mature in 6 years. Interest will be paid semiannually. Atthe date of issuance, assume that the market rate is (a) 10%, (b) , and (c) 12%.Use the appropriate present value tablePV of $1 and PV of Annuity of $1Required:For each market interest rate, answer the following questions. Round calculations and answers to the nearest whole dollar. Due to differences in rounding when using thepresent value factors, you need to round your answer for the ISSUE PRICE in the first column only to the nearest 100.Market Rate10%8%12%1. What is the ampunt due at maturity?2. How much cash interest will be pald every six months?3. At what price will the bond be issued?

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Answered: Isue Price Whitworth International…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.2E

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The following information applies to this question: Johnson Corporation plans to obtain financing with a $1,000,000 bond issue that has a term of 10 years. Payments wilI be made semi-annually. if the bond (payment) rate is stated at 7%, and the bonds call for semi-annual payments, what is the amount of those payments? O a. $350,000 O b. $70,000 OC. $35,000 d. $700,000
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