AL issues 7.9%, 20-year bonds with a face amount of $2,500,000 for $2,512,411. The market interest rate for bonds of similar risk and maturity is 7.85%. Interest is paid annually. 11. $ 12. $. Determine the interest payment. (rounded to nearest dollar). Determine interest expense for the first interest payment. 13. What will happen to interest expense each interest payment? (Increase, decrease, remain constant) 14. What will happen to the bond liability (carrying value) each interest payment? (Increase, decrease, remain constant). 15. $ How much will the company pay out when the bonds mature in 20 years (assume all interest payments have already been paid)?

AL issues 7.9%, 20-year bonds with a face amount of $2,500,000 for $2,512,411. The market interest rate for bonds of similar risk and maturity is 7.85%. Interest is paid annually. 11. $ 12. $. Determine the interest payment. (rounded to nearest dollar). Determine interest expense for the first interest payment. 13. What will happen to interest expense each interest payment? (Increase, decrease, remain constant) 14. What will happen to the bond liability (carrying value) each interest payment? (Increase, decrease, remain constant). 15. $ How much will the company pay out when the bonds mature in 20 years (assume all interest payments have already been paid)?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 21E

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