Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-On January 1, 2012, Cabuki Corporation issued $500,000 of 10 percent, 10-year bonds at 88.5. Interest is payable on December 31. If the market rate of interest was 12 percent at the time the bonds were issued, how much cash was paid for interest in 2012?

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-On January 1, 2012, Cabuki Corporation issued $500,000 of 10 percent, 10-year bonds at 88.5. Interest is payable on December 31. If the market rate of interest was 12 percent at the time the bonds were issued, how much cash was paid for interest in 2012?

Quizplus · Accepted Answer

The cash paid for interest is calculated based on the face value of the bonds and the stated interest rate. The face value is $500,000 and the stated interest rate is 10%, so the cash paid for interest in 2012 is $500,000 * 10% = $50,000.

Use the Present Value and Future Value Tables Included in Appendix