A company issues 8% bonds with a par value of $40,000 at par on January 1. The market rate on the date of issuance was 7%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:
A. $1,400.
B. $0.
C. $1,600.
D. $3,200.
E. $2,800.
Answer: C
Business
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