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Calculate the proceeds on issuance of the bonds

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Question - McGrath Metal Manufacturing issued $75 million 20-year bonds to finance the expansion of its operations into Fort McMurray, Alberta. The bonds pay 6% semi-annually and were issued at 89.322 to yield 7%.

a) Calculate the proceeds on issuance (price to investors) of the bonds.

b) Prepare the journal entry to record the first semi-annual interest payment for the bonds.

c) Why is the price of the bonds different than the face value?

Reference no: EM133074968

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