Blanding Company Issues $1 000 000 of 8%, 10- Year

Multiple Choice

Blanding Company issues $1 000 000 of 8%, 10- year debentures at 98 on 28 February 2013. The debenture pays interest on 28 February and 31 August. The market rate of interest on the issue date was 10%. On 31 August 2013, how much cash did Blanding pay out to debenture holders?

A) $41 000
B) $40 000
C) $39 000
D) $80 000