Table 15-7
Lex Enterprises is considering alternative ways of raising capital for the purchase of a new factory. One alternative suggested by the controller is the issuance of bonds. After discussions with an underwriter, Lex decides to issue $5,000,000 of 7%, 10-year bonds dated May 1, 2017, with interest payment dates of November 1 and May 1. Lex's year end is December 31. Lex uses the effective-interest method of amortization.
-Refer to Table 15-7.Assuming the bonds are issued at 104 plus accrued interest on July 1,2017,the semiannual cash payment for interest on November 1,2017 will be:
A) $175,000
B) $116,667
C) $182,000
D) $121,333
Correct Answer:
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