Question

Sheffield Corp. issues $30100000 of 10-year, 9% bonds on March 1, 2020 at 98 plus accrued interest. The bonds are dated January 1, 2020, and pay interest on June 30 and December 31. What is the total cash received on the issue date

Answer 1

Total proceeds 29,949,500‬

Step-by-step explanation:

We multiply the face value by the quoted price

30,100,000 bonds at 98 = 29.498.000

Then we solve for the accrued interest

principal x rate x time (being time expressed in portion of a year)

+ 30,100,000 x 0.09 x 2/12= 451.500‬

Total proceeds 29,949,500‬