Interest Expense and Price of Bonds

5. On June 30, 2011, Gunderson Electronics issued 8% stated rate bonds with a face
amount of $300 million. The bonds mature on June 30, 2031 (20 years). The market
rate of interest for similar bond issues was 10% (5% semiannual rate). Interest is paid
semiannually (4%) on June 30 and December 31, beginning on December 31, 2011.
a. Determine the price of the bonds on June 30, 2011.
b. Calculate the interest expense Gunderson reports in 2011 for these bonds.

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