The following Information applies to the questions displayed below. A company is
ID: 2523062 • Letter: T
Question
The following Information applies to the questions displayed below. A company issued $360,000, 9-year, 11 % bonds at 106.50. References Section Break SB A company issue... 4. 150 points value: MC Qu.119 What is the issue price of these... What is the issue price of these bonds? O $336,600 O $360,000o O $383,400 O $399,600 References Multiple Choice MC Qu.119 What is the issue price of these... value: 1.50 points MC Qu120 What is the total amount of interest expense... What is the total amount of interest expense that will be recorded over the life of these bonds? O $383,400 O $333,000 O $360,000 O $399,600Explanation / Answer
4. Issue price of bonds = issue price * number of bonds
= 106.5 * 3600
= $3,83,400
(here face value is $360000 and the face value per bond is $100)
5. Total amount of interest expense to be recorded = total interest over the 9 years - total premium on bonds
Interest per year = 11% * 360000 = $39,600
Total interest over life of bonds = 39600 * 9 = $3,56,400
Premium on bonds = 383400 - 360000 = $23400
Therefore, Total amount of interest expense to be recorded = 356400 - 23400
= $333,000