7. Ahmed Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2007 at 97 plus...

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Answer 1

Answer #1

Q 7 Answer

It is provided that Ahmed Company issues $ 20,000,000, 10 year, 9% bonds at 97

Here we can assume face value of bond as $ 100

Hence the bond which has face value of $ 100 issued at $ 97

Hence Ahmed company received

= Total issue size*Issue price/Face value

= $ 20,000,000* 97 / 100

= $ 19,400,000

Total cash received on issue date i.e January 1 2017 is $ 19,400,000.

Thank You.

Answer 2

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