Required: 1) what is the face amount of the bands? 2) what is the initial sellin

Question

Required:
1) what is the face amount of the bands?
2) what is the initial selling price of the bonds?
3) what is the term to maturity in years?
4) interest is determined by what approach?
5) what is the stated annual interest rate?
6) what is the effective annual interest rate?
7) what is the total cash interest paid over the term to maturity?
8) what is the total effective interest expense recorded over the term to maturity?

Solved : swathm × e swathmore Clot x https://newconnect.mheducation.com/flow/connect html xam Chapters 7, 12, 13, 14, and 15 i Saved Help Save & Exit Submit On January 1, 201 30 and December 31. Portions of the bond amortization schedule appear below: 8, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June Cash Payment Effective Increase in Outstanding Balance Payment Interest 252,000 269, 496 252,eee 27e,196 27e,924 52,eee 271,681 252,e80 272,468 252,eee 273, 287 17,496 18,196 18,924 19,681 26,468 21,287 Balance 6,737,407 6,754,903 6,773,099 6,792,023 6,811,784 6,832,172 6,853,459 252,8ee 4 5 38 39 48 252,eee 252,eee 252,8ee 326,676 329,663 332,769 74,676 77,663 80,769 8,241,568 8,319,231 8,40e,e0e Required 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 2:26 PM

Explanation / Answer

1 What is the face amount of the bonds Face amount 2 What is the initial selling price of the bonds? 6737407 3 What is the term to maturity in years? 20 years 40 payments semiannually = 40 /2 = 20 years 4 Interest is determined by what approach? Effective interest rate 5 What is the stated annual interest rate? (252000/8400000)*2*100 6% 6 What is the effective annual interest rate? 269496/6737407*2*100 8% 7 What is the total cash interest paid over the term to maturity? 252000*40 10080000 8 What is the total effective interest expense recorded over the term to maturity? 10080000+(8400000-6737407) 11742593

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