On January 1, Year 4, Jones Realty Company issued 8 percent term bonds with a face amount of $1 million due January 1, Year 14.Interest is payable semi-annually on January 1 and July 1.On the date of issue, investors were willing to accept an effective interest rate of 6 percent.Assume the bonds were issued on January 1, Year 4.for $1,148,959.The bonds were issued on January 1, Year 4, at

Question

Quizplus · Accepted Answer

The bond was issued for $1,148,959 which is higher than its face value of $1 million. Therefore, it was issued at a premium.

On January 1, Year 4, Jones Realty Company Issued 8