Problem:
On June 30, 2011, Gunderson Electronics issued 8% stated rate bonds with a face amount of $300 million. The bonds mature on June 30, 2031 (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, 2011.
Required:
Question 1: Determine the price of the bonds on June 30, 2011.
Question 2: Calculate the interest expense Gunderson reports in 2011 for these bonds.
Note: Explain all calculation and formulas.