On January 2, 20x5, Barham Corporation issued ten-year bonds payable with a face value of $400,000 and a face interest rate of 9 percent. The bonds were issued to yield a market interest rate of 10 percent. Interest is payable semiannually on January 2 and July 1. In calculating the present value of the bond issue on January 2, 20x5,
A) the 9 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments.
B) a 5 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments.
C) the 10 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments.
D) the 10 percent rate will be used to calculate the present value of the face amount and a 5 percent rate will be used to calculate the present value of the periodic interest payments.
B
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