Eaton Company issued $5 million of bonds with a 10% coupon rate of interest. When Eaton issued the bonds,the market rate of interest was 8%.Which of the following statements is incorrect?
A) The bonds were issued at a premium.
B) Annual interest expense will be less than the company's annual cash payments for interest.
C) The book value of the bonds will decrease as the bond matures.
D) The annual interest expense will increase if the effective-interest method of amortization is used.
Correct Answer:
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