Chapter 9, Problem 9.2S

(Learning Objective 1: Determine bond prices at par, discount, or premium) Determine whether the following bonds payable will be issued at par value, at a premium, or at a discount.

  a.    Evergreen Company issued bonds payable that pay stated interest of 6¼%. On the date of issuance, the market interest rate was 6¾%.

  b.    Seven Hills, Inc., issued 3% bonds payable when the market rate was 3¾%.

  c.    Flagstaff Corporation issued 5% bonds when the market interest rate was 5%.

  d.    The market interest rate is 4%. Rainforest Corp. issues bonds payable with a stated rate of 5½%.