Assume that on March 1, 2018, Alaska Corp. issues 10 percent, 10-year bonds payable with a maturity value of $1,200,000. The bonds pay interest on February 28 and August 31, and Alaska amortizes any premium or discount using the straight-line method. Alaska's
fiscal year end is December 31.
Requirement 1. If the market interest rate is 9.5 percent when Alaska Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain.
The 10 percent bonds issued when the market interest rate is 9.5 percent will be priced at _________ They are ________ in this market, so investors will pay ___________ to acquire them.'
