Cat Chow Corp. recently issued bonds with a face value of $4,000,000 and a coupon rate of 6% for 10 years. The market rate of interest is 4% and the bonds pay interest semi-annually.
A. Compute the market value of the bond using a financial calculator or Excel.
B. How much is the premium at the bond issuance date?
C. Assume the market rate remains the same after one year and Cat Chow Corp decides to retire this bond issuance at a cost of $ 4,480,000. Will there be a gain or loss on the retirement and what amount? How is this transaction recorded?

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The Answer of Cat Chow Corp. recently issued bonds with a face value of $4,000,000 and a coupon rate of 6% for 10 years. The market rate of interest is 4% and the bonds pay interest semi-annually.
A. Compute the market value of the bond using a financial calculator or Excel.
B. How much is the premium at the bond issuance date?
C. Assume the market rate remains the same after one year and Cat Chow Corp decides to retire this bond issuance at a cost of $ 4,480,000. Will there be a gain or loss on the retirement and what amount? How is this transaction recorded?