On January 2,20x5,Barham Corporation issued ten-year bonds payable with a face value of $400,000 and a face interest rate of 9 percent.The bonds were issued to yield a market interest rate of 10 percent.Interest is payable semiannually on January 2 and July 1.In calculating the present value of the bond issue on January 2,20x5,

Question

Quizplus · Accepted Answer

The market interest rate of 10% is divided by 2 for semiannual periods, resulting in a 5% rate used to calculate the present value of both the face amount and the periodic interest payments.

On January 2,20x5,Barham Corporation Issued Ten-Year Bonds Payable with a Face