EA6. LO 13.2 Oak Branch Inc. issued $700,000 of 5%, 10-year bonds when the market rate was 4%. They received $757,243. Interest was paid semi-annually. Prepare an amortization table for the first three years of the bonds.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
EA6. LO 13.2 Oak Branch Inc. issued $700,000 of 5%, 10-year bonds when the market rate was 4%. They received $757,243. Interest was paid semi-annually. Prepare an amortization table for the first three years of the bonds.
|
|
Cash Interest Payment Rate 0.025 |
|
Interest on Carrying Value Rate 0.02 |
|
Amortization of Premium |
|
Carrying Value |
|
Jan. 1, Year 1 |
|
|
|
|
757,243 |
||
|
June 30, Year 1 |
|
|
|
||||
|
Dec. 31, Year 1 |
|
|
|
||||
|
June 30, Year 2 |
|
|
|
||||
|
Dec. 31, Year 2 |
|
|
|
||||
|
June 30, Year 3 |
|
|
|
||||
|
Dec. 31, Year 3 |
|
|
|
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
