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Question(s) / Instruction(s):

A $300,000, ten-year, 6% bond issue was sold to yield 7% interest payable annually. Actuarial information for 10 periods is as follows:

 

 

 

6%

7%

Present value of 1

.558

.508

Present value of an annuity of 1

7.360

7.024

Refer to Exhibit 3. 

These bonds sold at

 

 

Answer

 

a premium

 

a discount

 

par

 

cannot be determined from the information given

6 points  

Question 30

  1.  

           Refer to Exhibit 3. At date of issuance cash received would be

Answer

 

$278,832

 

$293,820

 

$299,904

 

$300,000

6 points  

Question 31

  1.  

           Refer to Exhibit 3. The discount at the date of bond issuance would be

Answer

 

$         0

 

$       96

 

$  6,180

 

d.

$21,168

6 points  

Question 32

  1.  

R                    Refer to Exhibit 3. Using the effective interest method interest expense at the end of the first year is

Answer

 

$21,000

 

$19,518

 

$18,000

 

$16,730

 

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