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On Jаnuаry 1, Mаdmen, Inc., issued five-year bоnds, with $500,000 face value, carrying a cоupоn rate of 12% with interest payable semi-annually on June 30 and December 31 each year. At the time of the issuance, the discount rate on the bonds was 8%. PV factor tables for your reference: Picture1.png Picture2(1).png A. Calculate the price of the bonds at the time of issuance (show calculation) (8 points) B. Is the bond issued at par, discount, or premium? (2 points) C. Calculate the bond interest expense for the first year using effective interest rate amortization method.(6 points) D. If the yield on the company’s bonds decrease two years after bond issuance, what happens to the (i) bond prices and (ii) to bond amortization on balance sheet and income statement under effective interest rate amortization? Calculations not needed. (4 points) E. Two years after issuance, Madmen, Inc., is considering retiring the bonds. Interest rates have risen since issuance and the company’s bonds are now trading at prices lower than the current book value of the bond. If the company does retire (repurchase) the bonds, explain how will it affect company’s net income for the current period? Assume the company follows effective interest rate amortization method. Calculations not needed. (5 points)