Determining the Proceeds from Bond Issues Madison Corporation is authorized to i

Question

Determining the Proceeds from Bond Issues

Madison Corporation is authorized to issue $800,000 of 5-year bonds dated June 30, 2016, with a stated rate of interest of 11%. Interest on the bonds is payable semiannually, and the bonds are sold on June 30, 2016.

Required:

Determine the proceeds that the company will receive if it sells the following: (Click here to access the tables to use with this exercise and round your answers to two decimal places, if necessary.)

Explanation / Answer

Calculate proceeds of bonds :

Issue price on 12% = (800000*5.5%*7.36009+800000*0.55839) = 770555.96

Issue price on 10% = (800000*5.5%*7.72173+800000*0.61391) = 830884.12

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