Adidas issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adidas received $206,948 in cash proceeds. Which of the following statements is True?

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The par value of the bonds is $200,000 and the coupon rate is 8%, so the annual interest payment is $16,000. Since interest is paid semiannually, each payment is $8,000. The market rate on the issue date was 7.5%, which is lower than the coupon rate, so the bonds were issued at a premium. The cash proceeds of $206,948 are higher than the par value, which means investors were willing to pay more than the face value of the bonds. At maturity, Adidas must pay the par value of $200,000 plus the remaining interest payments, which is 20 payments of $8,000 each, for a total of $360,000. Therefore, the correct answer is C.

Adidas Issued 10-Year, 8% Bonds with a Par Value of $200,000