A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is...

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A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is...

A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. What is interest expense for 2021, using straight-line amortization?

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Answer 1

Answer #1

Discount on issue	296892	=15000000-14703108

Semi-annual discount amortization	7422.30	=296892/20*6/12
Semi-annual Interest payment	585000.00	=150000007.8%6/12
Semi-annual Interest expense	592422.30

Interest expense for 2021	1184845	=592422.30*2

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Answer 2

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