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Copper Industries Plans to Issue 8-Year, 8%, $100,000 Bonds Paying

Question 33

Multiple Choice

Copper Industries plans to issue 8-year, 8%, $100,000 bonds paying interest on an annual basis, at a $2,000 premium.
Which one of the following statements is true?


A) The cash paid to bondholders will be $2,000 each interest period.
B) Copper will receive $98,000 as the issue price.
C) Copper's annual interest expense on the bonds will be less than the amount of interest payments to bondholders each year.
D) Copper's annual interest expense on the bonds will be greater than the amount of interest payments to bondholders each year.

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