Question

On June 30, 2021, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2036 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Answer 1

1.

Face Value of Bonds				200,000,000
Stated rate of interest				6%
Market rate of interest				5%
Cash Semi annually @3%				6,000,000
Annuity factor at 2.5% for 30 periods				20.9303
Present value factor at 2.5% of Period-30th				0.4767
Present value of Interest				125581800
Present value of Maturity amount				95340000
Issue price				220921800
2.
Period end	Cash	Bond Int.	Premium	Carrying
	Interest	Expense	Amortize	Value
30.06.21			20,921,800	220,921,800
31.12.21	6,000,000	5523045	476,955	220,444,845
Cash interest paid: $ 6000,000
Interest expense of 2021: $ 5523,045