Adonis Corporation issued 10-year, 7% bonds with a par value of $130,000. Interest is paid semiannually. The market rate on the issue date was 6%. Adonis received $139,674 in cash proceeds. Which of the following statements is true?
A. Adonis must pay $139,674 at maturity plus 20 interest payments of $4550 each.
B. Adonis must pay $130,000 at maturity plus 20 interest payments of $3900 each.
C. Adonis must pay $130,000 at maturity and no interest payments.
D. Adonis must pay $130,000 at maturity plus 20 interest payments of $4550 each.
E. Adonis must pay $139,674 at maturity and no interest payments.
Answer: D
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