Use the following information to answer the next 6 questions:
X2 issued callable bonds on January 1,2015.The bonds pay interest annually on December 31 each year.X2's accountant has projected the following amortization schedule from issuance until maturity:

-X2 issued the bonds for:
A)$100,000.
B)$107,000.
C)$104,212.
D)Cannot be determined from the given information.

Question

Use the following information to answer the next 6 questions:
X2 issued callable bonds on January 1,2015.The bonds pay interest annually on December 31 each year.X2's accountant has projected the following amortization schedule from issuance until maturity:
 
-X2 issued the bonds for:
A)$100,000. 
B)$107,000. 
C)$104,212. 
D)Cannot be determined from the given information.

Quizplus · Accepted Answer

The total interest paid over the life of the bond is $20,000 ($2,000 per year for 10 years). Therefore, the total amount paid to bondholders (including the principal) is $124,212 ($104,212 + $20,000). Since the bonds were issued at a discount, the amount received by X2 must have been less than $124,212. The only answer choice that is less than $124,212 is C ($104,212).

Use the Following Information to Answer the Next 6 Questions