138. On January 1, 2015, Water Wonderland issues $20 million of 8% bonds, due in ten years, with interest payable semiannually on June 30 and December 31 each year.
1. If the market rate is 7%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.
2. If the market rate is 8%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.
3. If the market rate is 9%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price.
139. Pizza Pier issues 7%, 10-year bonds with a face amount of $80,000 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is also 7%. Interest is paid semiannually on June 30 and December 31.
1. Record the bond issue.
2. Record the first interest payment on June 30, 2015.