Heather Corporation issued $2,000,000, 10-percent, 10-year bonds on January 2, Year 2 . The bonds pay interest semiannually on January 1 and July 1 . The bonds were priced on the market to yield 8 percent. Refer to the Heather Corporation example. The issue price of the bonds is calculated as follows:
a. the present value of $2,000,000 at 10 percent for 10 periods, plus the present value of an annuity of $100,000 at 4 percent for 20 periods.
b. the present value of $2,000,000 at 5 percent for 20 periods, plus the present value of an annuity of $100,000 at 5 percent for 20 periods.
c. the present value of $2,000,000 at 8 percent for 10 periods, plus the present value of an annuity of $100,000 at 4 percent for 20 periods.
d. the present value of $2,000,000 at 4 percent for 20 periods, plus the present value of an annuity of $100,000 at 4 percent for 20 periods.
e. none of the above
D
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