Information related to your companies bond issuance on 1/1/14 is below: Calculat
ID: 2424788 • Letter: I
Question
Information related to your companies bond issuance on 1/1/14 is below: Calculate the PV of maturity value, PV of annuity, total issue price, and the discount or premium. Finally, complete the amortization schedule below.
Par Value $200,000.00
Stated Rate 6.00%
Yield Rate 8.00%
Bond Term 3 years
Semiannual payments 2 Per Year
PV of maturity value =
PV of annuity =
Total Issue Price =
Face amount of bonds =
Discount/Premium =
1
Payment Beginning Book Value Cash Paid Interest Expense Disc/Prem Amortized Ending Book Value1
2 3 4 5 6Explanation / Answer
PV of maturity value = 200000 / (1 + 0.08/2)2*3 + 6000 ( 1 -( 1+0.08/2)-6 / 0.08/2
= 200000 / (1.04)6 + 6000 [(1 - 1/1.265) / 0.04
= 200000 / 1.265 + 6000 (1.265-1 / 1.265) / 0.04
= 158102.76 + 6000 * (0.209) / 0.04
= 158102.76 + 31350
= 189452.76
PV of annuity = (200000 * 6%* 6/12) * [ 1 - ( 1 + 0.06/2)-3*2 / 0.06 /2
= 6000 * (1 - (1+0.03)-6 / 0.03
= 6000 * (1 - 1/ 1.194) / 0.03
= 6000 * 1.194 - 1 /1.194 / 0.03
= 6000 * 0.162 /0.03
= 32400