Determining Selling Prices of Bonds Under Different Interest AssumptionsOlay Inc. issues $160,000, 8%, 10-year bonds payable on January 1, 2020. Calculate the selling price of the bonds under the following separate assumptions.Round your answer to the nearest whole number.Do not use negative signs with your answers. a. The bonds pay cash interest annually ($12,800) and the market rate of interest on similar bonds is 10%.Answer b. The bonds pay cash interest annually ($12,800) and the market rate of interest on similar bonds is 8%.Answer c. The bonds pay cash interest annually ($12,800) and the market rate of interest on similar bonds is 6%.Answer d. The bonds pay cash interest semiannually ($6,400) and the market rate of interest on similar bonds is 10%.Answer e. The bonds pay cash interest semiannually ($6,400) and the market rate of interest on similar bonds is 8%.Answer f. The bonds pay cash interest semiannually ($6,400) and the market rate of interest on similar bonds is 6%.Answer

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Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.1AP

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Determining Selling Prices of Bonds Under Different Interest Assumptions

Olay Inc. issues $160,000, 8%, 10-year bonds payable on January 1, 2020. Calculate the selling price of the bonds under the following separate assumptions.

Round your answer to the nearest whole number.
Do not use negative signs with your answers.

	a. The bonds pay cash interest annually ($12,800) and the market rate of interest on similar bonds is 10%.	Answer
	b. The bonds pay cash interest annually ($12,800) and the market rate of interest on similar bonds is 8%.	Answer
	c. The bonds pay cash interest annually ($12,800) and the market rate of interest on similar bonds is 6%.	Answer
	d. The bonds pay cash interest semiannually ($6,400) and the market rate of interest on similar bonds is 10%.	Answer
	e. The bonds pay cash interest semiannually ($6,400) and the market rate of interest on similar bonds is 8%.	Answer
	f. The bonds pay cash interest semiannually ($6,400) and the market rate of interest on similar bonds is 6%.	Answer

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