Essay
On June 30, 2013, Gunderson Electronics issued 8% stated rate bonds with a face amount of $300 million. The bonds mature on June 30, 2033 (20 years). The market rate of interest for similar bond issues was 10% (5% semiannual rate). Interest is paid semiannually (4%) on June 30 and December 31, beginning on December 31, 2013.
Required:
a. Determine the price of the bonds on June 30, 2013.
b. Calculate the interest expense Gunderson reports in 2013 for these bonds.
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