Reynolds Co. issued $72 million face amount of 10.75% bonds when market interest rates were 11.10% for bonds of similar risk and other characteristics.
Required:
a.How much interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
b. Were the bonds issued at a psaremium or discount?
c.Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year?