On July 1,2011,Ace Electronics issued $10 million dollars of 8%,20-year bonds at 102.The bonds pay interest SEMIANNUALLY on December 31 and June 30.How much cash did Ace receive when the bonds were issued?

Question

On July 1,2011,Ace Electronics issued $10 million dollars of 8%,20-year bonds at 102.The bonds pay interest SEMIANNUALLY  on December 31 and June 30.How much cash did Ace receive when the bonds were issued?

Quizplus · Accepted Answer

The bonds were issued at 102, which means they were sold for 102% of their face value. The face value of the bonds is $10 million, so 102% of $10 million is $10.2 million. Therefore, Ace received $10.2 million in cash when the bonds were issued.

On July 1,2011,Ace Electronics Issued $10 Million Dollars of 8%,20-Year