Acct 410 Additional Exercise, Bonds
On January 1, 2001, McVay issued $100,000 of 14%, 20-year bonds at $88,075. On
the date of issue, the market rate on similar bonds was 16%. The bonds pay interest on
January 1 and July 1 (Note: If the company pays interest semi-annually, use half of the
annual stated rate for semi-annual interest rate).
The carrying value of the bonds (i.e., the net book value of the bond) on January 1, 2021
In the previous question for McVay, how much will the interest expense and coupon
payment be on July 1, 2001?
McKenzie Company issued $500,000 of 12%, 10-year bonds at $562,360 on January
1, 2001. Similar bonds were recently issued for 10% (i.e., the market rate is 10%). The
bonds pay interest on January 1 and July 1 (Again: If the company pays interest semi-
annually, use half of the annual stated rate for semi-annual interest rate).