On January 1, 2018, Wauwatosa Inc. issued 5- year bonds with a fave value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
On January 1, 2018, Wauwatosa Inc. issued 5- year bonds with a fave value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...
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On January 1, 2018, Wauwatosa Inc. issued 5- year bonds with a fave value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
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Step 1
When the issue price of the bond is higher than its face value, the bonds are said to be issued at a premium and when the issue price of the bond is lower than its face value, the bonds are said to be issued at a discount.
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