On January 2,2013,Owsley Corporation issued 20-year bonds payable with a face value of $600,000 and a face interest rate of 10 percent.The bonds were issued to yield a market interest rate of 12 percent.Interest is payable annually on January 2.In calculating the present value of the bond issue of January 2,2013,the
A) 12 percent rate will be used to calculate the present value of the face amount and the 10 percent rate will be used to calculate the present value of the periodic interest payments.
B) 12 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments.
C) 10 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments.
D) 10 percent rate will be used to calculate the present value of the face amount and the 12 percent rate will be used to calculate the present value of the periodic interest payments.
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