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Starlight Drive-Ins borrowed money by issuing $3,000,000 of 7% bonds payable at 98.5
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Question & Answer: Starlight Drive-Ins borrowed money by issuing $3,000,000 of 7% bonds payable at 98.5…..
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R1. How much cash did Starlight recieve when it issued the bonds payable?
R2. How much must Starlight pay back at maturity?
R3. How much cash interest will Starlight pay each six months?
Expert Answer
a.Cash received=($3,000,000*98.5%)=$2,955,000.
b.Payable at maturity=$3,000,000(the par value).
c.Cash interest every 6 months=($3,000,000*7%)*6/12=$105,000.
