XYZ Corp is issuing $1 million (face value) 10% bonds on January 1, 2016. The bonds mature in 10 years and pay semi-annual interest on June 30 and December 31 of each year. The market interest rate for similar types of bonds was 8%. What is the interest expense that XYZ Corp will recognize on the bond issue during 2016?

First of all, let us find out the price of bonds :- 1 million * PVIF ( 4 % , 20 ) + 1 million * 5 %

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Question: XYZ Corp is issuing $1 million (face value) 10% bonds on January 1, 2016. The bonds mature in 10 years and pay semi-annual interest on June 30 and December 31 of each year. The market interest rate for similar types of bonds was 8%. What is the interest expense that XYZ Corp will recognize on the bond issue during 2016?
XYZ Corp is issuing $1 million (face value) 10% bonds on January 1, 2016. The bonds mature in 10 years and pay semi-annual interest on June 30 and December 31 of each year. The market interest rate for similar types of bonds was 8%. What is the interest expense that XYZ Corp will recognize on the bond issue during 2016?
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First of all, let us find out the price of bonds :- 1 million * PVIF ( 4 % , 20 ) + 1 million * 5 % …
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