Looking for answers? Westonci.ca is your go-to Q&A platform, offering quick, trustworthy responses from a community of experts. Experience the convenience of getting reliable answers to your questions from a vast network of knowledgeable experts. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.
Sagot :
Answer:
1. $7,000,000
2. $4,893,518
3. 20 years
4. Effective interest method
5. 8%
6.12%
7.$11,200,000
8. $13,306,482
Explanation:
1. Based on the information given the Face amount of bonds will be $7,000,000
2. Based on the information given the initial selling price of the bonds will be $4,893,518
3.Calculation for the term to maturity in years
Term to maturity = 40/2
Term to maturity = 20 years
4. Based on the information given the Interest will be determined by using Effective interest method
5. Calculation for the stated annual interest rate
Stated annual interest rate = 280,000/7,000,000 = 4*2
Stated annual interest rate = 8%
6. Calculation for the effective annual interest rate
Effective interest rate = 293,611/4,893,518
Effective interest rate= 6*2
Effective interest rate= 12%
7. Calculation for the total cash interest paid over the term to maturity
Total cash paid for interest = 280000*40
Total cash paid for interest = $11,200,000
8. Calculation for the total effective interest expense recorded over the term to maturity
Total effective interest expense = $11,200,000+2,106,482
Total effective interest expense=$ 13,306,482
(4,893,518-7,000,000=2,106,482)
Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.