Adonis Corporation issued 10-year, 9% bonds with a par value of $180,000. Interest is paid semiannually....
Adonis Corporation issued 10-year, 9% bonds with a par value of $180,000. Interest is paid semiannually. The market rate on the issue date was 8%. Adonis received $192,233 in cash proceeds. Which of the following statements is true?
Multiple Choice
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Adonis must pay $192,233 at maturity and no interest payments.
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Adonis must pay $180,000 at maturity plus 20 interest payments of $8,100 each.
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Adonis must pay $180,000 at maturity plus 20 interest payments of $7,200 each.
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Adonis must pay $192,233 at maturity plus 20 interest payments of $8,100 each.
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Adonis must pay $180,000 at maturity and no interest payments.
Homework Answers
Answer: Adonis must pay $180,000 at maturity plus 20 interest payments of $ 8100 each.
Reason :- At the time of maturity, it is not mentioned that redemption will be at premium, so redemption will be at par value i.e $180,000. and the interest rate would be 9%( the bond rate) as bound to pay to the bondholder.
The market rate of interest is irrelevant for payment to the bondholder so interest is paid as contracted.
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Adonis Corporation issued 10-year, 9% bonds with a par value of
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