Question
1- Your Corporation borrowed $500,000 on the installment basis on January 1 of Year one. The note provides for 6% annual interest and equal annual
1-
Your Corporation borrowed $500,000 on the installment basis on January 1 of Year one. The note provides for 6% annual interest and equal annual payments of interest and principal of $48,912 on December 31 of each year the loan is outstanding.
How much of the first payment of $48,912 reduced the principal of the loan?
2-
Your Company issued bonds with a par value of $1,000,000 at 101 on January 1, Year 1. The bonds had a stated interest rate of 5% with a 20 year term. Interest is paid annually on December 31. At the time the bonds were issued the market rate was 4%.
How much money did your company receive when the bonds were issues?
3-
Your Company issued bonds with a par value of $1,000,000 at 97 on January 1, Year 1. The bonds had a stated interest rate of 4% with a 20 year term. Interest is paid annually on December 31. At the time the bonds were issued the market rate was 5%.
How much cash did Your Company have to pay bondholders on December 1 Year 1?
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