The Biltmore National Bank raised capital through the sale of $100 million face value of 8% coupon rate, 10-year bonds. The bonds paid interest semiannually and were sold at a time when equivalent risk-rated bonds carried a yield rate of 10%.
1.Calculate the proceeds that The Biltmore National Bank received from the sale of the 8% bonds.
2How will the bonds be disclosed on Biltmore's balance sheet immediately following the sale?
Round your answers to the nearest dollar.
Balance sheet disclosure (following sale):
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Bonds payable
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Less: Bonds discount (enter as negative)
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Bonds payable(net)
Calculate the interest expense on the bonds for the first year that the bonds are outstanding.
First six months
Second six months
Calculate the book value of the bonds at the end of the first year
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