Power Solutions Ltd. issues a $15,000,000, five-year, 4.5% bond with semi-annual interest payments. Underwriting costs, paid up front,are $960,00O. The bond sells at par.Required:1. How much cash does Power receive when the bond is issued?Power receives2. What is the effective interest rate on the bond? (Round your answer to the nearest whole percentage.)Effective interest rate per annum 3. Prepare an amortization table using the effective-interest method of amortization. Complete the first four payments only. (Roundyour effective interest rate to the nearest whole percentage and your final answers to the nearest whole dollar.)D or PAmortizationClosing NetBond Liab.Cash InterestInterestPeriodPaidExpenseOp. balance1234

Part (1) Cash received by Power on issue of Bond : Bonds Issued at Par = $15,000,000 Upfront…

Power Solutions Ltd. issues a $15,000,000, five-year, 4.5% bond with semi-annual interest payments. Underwriting costs, paid up front, are $960,000. The bond sells at par. Required: 1. How much cash does Power receive when the bond is issued? Power receives 2. What is the effective interest rate on the bond? (Round your answer to the nearest whole percentage.) Effective interest rate per annum %

Power Solutions Ltd. issues a $15,000,000, five-year, 4.5% bond with semi-annual interest payments. Underwriting costs, paid up front, are $960,000. The bond sells at par. Required: 1. How much cash does Power receive when the bond is issued? Power receives 2. What is the effective interest rate on the bond? (Round your answer to the nearest whole percentage.) Effective interest rate per annum %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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