3 /5 116% Question 3 (72 marks) On December 31, Year 7, PCP Ltd. purchased bonds of ACP Ltd. The bonds mature on December 31, Year 12, and have a maturity value of $1,000,000. The stated interest rate on the bonds is 3% (yearly rate). Interest is paid each June 30 and December 31. The bonds were purchased to yield 3.4% (yearly rate). The bonds will be accounted for at cost/amortized cost. a) What was the purchase price of the bonds? (To the nearest dollar). Please highlight your final figure in yellow. (3 marks) b) (4 marks) i) How much bond interest income (round to the nearest dollar) should PCP report on June 30, Year 8? (Please highlight your final figure in yellow.) ii) How much bond interest income (round to the nearest dollar) should PCP report on December 31, Year 8? (Please highlight your final figure in yellow.) c) On December 31, Year 8, (after collecting their interest for December) PCP was experiencing some cash flow problems and sold the bonds. The bonds Type here to search Eli WEX T (+ 116% How much bond interest income (round to the nearest dollar) should PCP report on June 30, Year 8? (Please highlight your final figure in yellow.) ii) How much bond interest income (round to the nearest dollar) should PCP report on December 31, Year 8? (Please highlight your final figure in yellow.) c) On December 31, Year 8, (after collecting their interest for December) PCP was experiencing some cash flow problems and sold the bonds. The bonds were available in the secondary market at a yield rate of 3.6%. What would be the amount of the gain or loss? Show calculations for possible part marks. Please highlight your final figure in yellow and clearly indicate if it is a gain or a loss. (5 marks) WE Type here to search