Question: 1. If bonds issue at a premium, is the stated interest rate less than, equal to, or more than the market interest rate? Explain.
2. Extreme Motion issues $500,000 of 6% bonds due in 20 years with interest payable semiannually on June 30 and December 31. What is the amount of the cash payment for interest every six months? How many interest payments will there be?
3. Extreme Motion issues $500,000 of 6% bonds due in 20 years with interest payable semiannually on June 30 and December 31. Calculate the issue price of the bonds assuming a market interest rate of:
a. 5%
b. 6%
c. 7%