Question
1.John wants to make a deposit on 1/1/2016 to be able to withdraw $1,000 at the beginning of each year starting 1/1/2020 for four years.
1.John wants to make a deposit on 1/1/2016 to be able to withdraw $1,000 at the beginning of each year starting 1/1/2020 for four years. The interest rate is 6 percent.
2.Timken Company issues a $1,000,000 bond at 9% for 10 years. The market interest rate is 10%.
Required:
1. What is the issue price of these bonds and the bond discount or premium?
2. Assume that Timken uses the effective interest method to amortize the bond discount or premium for the annual interest payments, what is the interest expense and the amount of cash paid on the first interest payment?
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