On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment ANAS!! 1 2 1. 2. 3. 38 39 48 Cash Payment 216,000 216,000 230,997 231,597 216,000 232, 221 216,000 232,869 216,000 233,544 216,000 234, 246 216,000 216,000 216,000 Effective Increase in Interest Balance 280,008 282,568 285,230 Face amount Initial selling price Term to maturity 14,997 15,597 16,221 16,869 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 17,544 18,246 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? 64,008 66,568 69,230 4. Interest is determined by what approach? 5. Annual interest rate 6. Effective annual interest rate 7. Total cash interest paid 8. Effective interest expense Outstanding Balance 5,774,920 5,789,917 6. What is the effective annual Interest rate? 7. What is the total cash Interest paid over the term to maturity? 8. What is the total effective Interest expense recorded over the term to maturity? 5,805,514 5,821,735 5,838,604 5,856,148 5,874,394 7,064,202 7,130,770 7,200,000 years 96 %6
On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment ANAS!! 1 2 1. 2. 3. 38 39 48 Cash Payment 216,000 216,000 230,997 231,597 216,000 232, 221 216,000 232,869 216,000 233,544 216,000 234, 246 216,000 216,000 216,000 Effective Increase in Interest Balance 280,008 282,568 285,230 Face amount Initial selling price Term to maturity 14,997 15,597 16,221 16,869 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 17,544 18,246 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? 64,008 66,568 69,230 4. Interest is determined by what approach? 5. Annual interest rate 6. Effective annual interest rate 7. Total cash interest paid 8. Effective interest expense Outstanding Balance 5,774,920 5,789,917 6. What is the effective annual Interest rate? 7. What is the total cash Interest paid over the term to maturity? 8. What is the total effective Interest expense recorded over the term to maturity? 5,805,514 5,821,735 5,838,604 5,856,148 5,874,394 7,064,202 7,130,770 7,200,000 years 96 %6
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay Interest semiannually on June 30 and
December 31. Portions of the bond amortization schedule appear below.
Payment
ANAS!!
1
2
1.
2.
3.
38
39
48
Cash
Payment
216,000
216,000
230,997
231,597
216,000
232, 221
216,000
232,869
216,000 233,544
216,000
234, 246
216,000
216,000
216,000
Effective Increase in
Interest
Balance
280,008
282,568
285,230
Face amount
Initial selling price
Term to maturity
14,997
15,597
16,221
16,869
Required:
1. What is the face amount of the bonds?
2. What is the initial selling price of the bonds?
3. What is the term to maturity in years?
17,544
18,246
4. Interest is determined by what approach?
5. What is the stated annual Interest rate?
64,008
66,568
69,230
4.
Interest is determined by what approach?
5.
Annual interest rate
6.
Effective annual interest rate
7.
Total cash interest paid
8. Effective interest expense
Outstanding
Balance
5,774,920
5,789,917
6. What is the effective annual Interest rate?
7. What is the total cash Interest paid over the term to maturity?
8. What is the total effective Interest expense recorded over the term to maturity?
5,805,514
5,821,735
5,838,604
5,856,148
5,874,394
7,064,202
7,130,770
7,200,000
years
96
%6
Expert Solution
Step 1 Introduction
Bond :— It is one of the source of capital that pays periodic interest and principal amount at the end of maturity term.
Face Value of bond :— It is the principal amount that is paid to investors at the end of maturity term.
Initial Selling Price :— It is the current price of bond at the time of issue of bond.
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