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TeslaShock Corporation manufactures electrical test equipment. The company's board of directors authorized a bond issue on January 1 of this year with the following terms: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

  

Face (par) value: $803,500

Coupon rate: 8 percent payable each December 31

Maturity date: December 31, end of Year 5

Annual market interest rate at issuance: 12 percent

Required:

1. Compute the bond issue price. (Round your final answers to nearest whole dollar amount.)

2. Assume that the company used the straight-line amortization method. Compute the following for Year 1 through Year 5: (Round your final answers to nearest whole dollar amount.)

Answer 1

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Part 1
	Amount	PVF 12%, 5 period	PV
Present value of Face value of bond	$                            803,500	0.56743	$           455,927
Present value of interest on Bond ($803,500*8%))	$                              64,280	3.60478	$           231,715
Bond Issuieng Price			$           687,642
			$           115,858
	a	b=a+c	c	d
	Cash Payment 8%	Interest Expense	Amortization
			$115,858/5	$                 687,642
Year 1	$                              64,280	$                                     87,452	$             23,172	$                 710,814
Year 2	$                              64,280	$                                     87,452	$             23,172	$                 733,985
Year 3	$                              64,280	$                                     87,452	$             23,172	$                 757,157
Year 4	$                              64,280	$                                     87,452	$             23,172	$                 780,328
Year 5	$                              64,280	$                                     87,452	$             23,172	$                 803,500