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(Solution) - George s Inc is considering issuing bonds to finance the acquisition

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George's Inc. is considering issuing bonds to finance the acquisition of a nationwide chain of distributors of George's products. George's is contemplating two different types of bonds to raise the required $180 million purchase price. The first is a traditional 10-year, 14% bond with semiannual interest payments. The second is a 10-year, zero coupon bond.
Assuming the market rate of interest is 14%, compute the face value of the bond issuance and make the journal entries necessary to record the issuance if
(a) A traditional bond is issued and
(b) A zero-coupon bond is issued.


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This question was answered on: Jul 11, 2017

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