ACTG 2200 Lecture Notes - Lecture 7: Authorised Capital, Interest Expense, Net Income

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I (interest rate: find on sheet, aka: bond rate, coupon rate, stated rate. 6% on principal = ,000 each year: i and n (sheet 1) = . 74726, . 74726 * 100,000 = ,726, i and n (sheet 2) = 4. 21236, 4. 21236 * 6,000 = ,274. I: 7: = 250,000 * . 07, present value (pv) of 250,000 for 10 periods (table 2, 250,000 * 0. 50835 = ,087. 50, pv of 250,000 for 10 periods (table 4, 17,500 * 7. 02358 = ,912. 65. I: 7: use this over i in calculations, ,500 stays the same because already agreed upon, determines pv. Payment: ,500: = 250,000 * . 07, present value (pv) of 250,000 for 10 periods (table 2, 250,000 * 0. 46319 = ,797. 50, pv of 250,000 for 10 periods (table 4, 17,500 * 6. 71008 = ,426. 40. Amortization schedule for bonds issued at a premium (on packet) Interest expense = carrying value * market interest. Cash paid for interest = face value * stated rate.

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