?

Financial Accounting

Free Version

Upgrade subject to access all content

Easy

Determine Issuing Price

FINACT-7FJZVX

Bookworm Co issued a 3-year \$1,000,000 bond on 1/1/2015 with a stated interest rate of 5% and an effective interest rate of 6%. The company pays interests on 12/31/2015, 12/31/2016, and 12/31/2017. 12/31/2017 is the maturity date so the company also needs to return the principal of \$1,000,000 on this date.

Given the above information, what would be the cash receipt (in $) at issue?

A

1,000,000

B

973,269.88

C

1,150,000

D

1,180,000