What is the total interest cost of the bonds​?

Mathematics
Tutor: None Selected Time limit: 1 Day

Shakey Company issued $500,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the total interest cost of the bonds

Nov 19th, 2015

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Hi,

Please find the detailed answer as follows:

Part A:

Total Interest Cost = (500000*6%*5) + 500000*(1 -.98) = $160000


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Nov 19th, 2015

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