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What is the interest expense and the amount of cash paid

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US Steel issues a $2,000,000 bond at 10% for 8 years. The market interest rate is 9%.

Required:

Problem 1. What is the issue price of these bonds and the bond discount or premium?

Problem 2. Assume that US Steel uses the effective interest method to amortize the bond discount or premium for the annual interest payments, what is the interest expense and the amount of cash paid the second interest payment?

Reference no: EM132821740

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