1) Determine the price of a $1 million bond issue under each of the following independent assumptions:

Maturity

Interest paid

Stated rate

Effective (market) rate

1

10 years

Annually

10%

12%

2

10 years

Semiannually

10%

12%

3

10 years

Semiannually (July 1 and January 1)

12%

10%

4

20 years

Semiannually

12%

10%

5

20 years

Semiannually

12%

12%

2) Prepare journal entries to record the issuance for each of the following the above independent assumptions

3) Only for Assumption 1 and 2, prepare an amortization schedule that determines interest at the effective rate.