Question
In: Accounting
Coney Island Entertainment issues $1,500,000 of 5% bonds, due in 10 years, with interest payable semiannually...
Coney Island Entertainment issues $1,500,000 of 5% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.
Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:
3. The market interest rate is 4% and the bonds issue at a premium. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.)
Solutions
Expert Solution
| a. | Issue price of bond | = | =-pv(rate,nper,pmt,fv) | Where, | ||||
| = | $ 16,22,635.75 | rate | 2% | |||||
| nper | 20 | |||||||
| pmt | $ 37,500 | |||||||
| fv | $ 15,00,000 | |||||||
| b. | Amortization Schedule: | |||||||
| Semi annual period ending on | Interest expense | Coupon paid in cash | Premium amortization | Unamortized Premium | Carrying value of bond | |||
| January 1 | $ 1,22,635.75 | $ 16,22,635.75 | ||||||
| June 30 | $ 32,452.72 | $ 37,500.00 | $ 5,047.28 | $ 1,17,588.47 | $ 16,17,588.47 | |||
| December 31 | $ 32,351.77 | $ 37,500.00 | $ 5,148.23 | $ 1,12,440.23 | $ 16,12,440.23 | |||
ekkarill92 answered 2 years agoRelated Solutions
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