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    Important Information about Cash interest

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    The Ness Company sells $5,000,000 of five-year, 10% bonds at the start of the year. The bonds have an effective yield of 9%. Present value factors are below:

    10% 9%
    PV factor 1 year 0.90909 0.91743
    PV factor 2 years 0.82645 0.84168
    PV factor 3 years 0.75131 0.77218
    PV factor 4 years 0.68301 0.70843
    PV factor 5 years 0.62092 0.64993

    The amount of cash interest paid in Year 1 on the bonds is

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    Solution Summary

    The solution explains how to calculate the amount of cash interest

    $2.19

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