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Question: on january 1 of year 1 congo express airways issued...

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On January 1 of Year 1, Congo Express Airways issued $4,000,000 of 7%, bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,550,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized using the straight-line method at a rate of $12,500 every 6 months. The life of these bonds is:

Multiple Choice

  • 36 years.

  • 12 years.

  • 32 years.

  • 28 years

  • 18 years.

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