FFB sold bonds at the beginning of the year on June 1, 2014. The bonds had...

FFB sold bonds at the beginning of the year on June 1, 2014. The bonds had a face value of $2,000 and payments of $50 each due on December 1 and June 1. (The contract or stated rate = 5%, annual). The bonds sold on the market on June 1, 2014, to yield investors a 6% annual rate of return.

Prepare an amortization table for the bond. Use Excel. Consider the fact that liabilities have increased and that interest expense for the fiscal year 2015 has also increased due to the debt. The amount of interest for the year will be shown on your amortization table.

Expert Solution

FV	2000		Bond amortization table
NPER	2	(1 x 2)	Time	Cash Paid	Interest Expense	Discount amortization	Carrying Value
PMT	50		June 1, 2014				$ 1,980.87
Rate	3%	(6%/2)	Dec 1, 2014	50	59.43	9.43	1,990.30
PV(Price)	($1,980.87)		June 1, 2015	50	59.71	9.71	2,000.00
	=PV(3%,2,50,2000)

ekkarill92 answered 2 years ago

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