Who knows the answer for this question?

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  • September 1, 2011 at 4:29 am #161543
    wilwilwilos
    Member

    Company A sold bonds with a face value of $18M on Jan 1 of the current year. The face rate on the bonds is 12% per annual compounded quarterly. The term of the bonds is 5 yrs. The bonds were sold at 101.5 (101.5% of the face value)

    Draw up a chart showing the total cash payments for interest, any premium or discount amortization, and interest expense for each quarter

    Many Thanks!!

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  • September 1, 2011 at 4:56 am #294169
    ScruffMcGruff
    Member

    They using Effective Interest Method or Straight Line Method? And also what is the market rate for the bonds (obviously lower than 12% since it's selling at a premium)?

    AUD - 85
    FAR - 78 (lol@ FAR Sims)
    REG - 85
    BEC - August

    September 1, 2011 at 6:37 am #294170
    wilwilwilos
    Member

    Straight Line Method, market rate is 101.5% of the face value??

    many thanks!

    September 2, 2011 at 6:29 am #294171
    ScruffMcGruff
    Member

    Oops, didn't see that you replied last night. It's late, but I'll type up an answer for you tomorrow afternoon. One last question though: You using Becker or any other review program? Only reason I ask is that usually they have some pretty good examples/tables to show you how to do it (at least Becker does in my opinion).

    AUD - 85
    FAR - 78 (lol@ FAR Sims)
    REG - 85
    BEC - August

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