A company issued 10-year,8% bonds with a face value of $200,000.Interest is paid annually.The market rate on the issue date was 7.5% and the company received $206,948 in cash proceeds.Which of the following statements is true?
A)The company must pay $184,000 at maturity plus $16,000 in interest each year for 10 years.
B)The company must pay $206,948 at maturity plus $15,000 in interest each year for 10 years.
C)The company must pay $200,000 at maturity plus $16,000 in interest each year for 10 years.
D)The company must pay $200,000 at maturity plus $15,000 in interest each year for 10 years.

Question

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The company must pay the face value of $200,000 at maturity and $16,000 in interest each year (8% of $200,000). The cash proceeds received do not affect the maturity value or the annual interest payments.

A Company Issued 10-Year,8% Bonds with a Face Value of $200,000.Interest