Chapter 14 Homework Compute Bond Proceeds, Amortizing Discount by Interest Method, and Interest Expense Lewis Co. produces and sells aviation equipment. On the first day of its fiscal year, Lewis Co. issued $30,000,000 of four-year, 10% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 8 and Exhibit 10. Round to the nearest dollar. b. The amount of discount to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar. c. The amount of discount to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar. d. The amount of the bond interest expense for the first year. Round to the nearest dollar. Present Value of $1 at Compound Interest EXHIBIT 8 Periods 10% 2 3 4 5 6 7 8 9 10 4% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069 0.70259 0.67556 472% 0.95694 0.91573 0.87630 0.83856 0.80245 0.76790 0.73483 0.70319 0.67290 0.64393 5% 0.95238 0.90703 0.86384 0.82270 0.78353 0.74622 0.71068 0.67684 0.64461 0.61391 5%% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 0.65160 0.61763 0.58543 6% 0.94340 0.89000 0.83962 0.79209 0.74726 0.70496 0.66506 0.62741 0.59190 0.55839 6%% 0.93897 0.88166 0.82785 0.77732 0.72988 0.68533 0.64351 0.60423 0.56735 0.53273 7% 0.93458 0.87344 0.81630 0.76290 0.71299 0.66634 0.62275 0.58201 0.54393 0.50835 0.90909 0.82645 0.75131 0.68301 0.62092 0.56447 0.51316 0.46651 0.42410 0.38554 11% 0.90090 0.81162 0.73119 0.65873 0.59345 0.53464 0.48166 0.43393 0.39092 0.35218 12% 0.89286 0.79719 0.71178 0.63552 0.56743 0.50663 045235 0.40388 0.36061 0.32197 13% 0.88496 0.78315 0.69305 0.61332 0.54276 0.48032 0.42506 0.37616 0.33288 0.29459 EXHIBIT 10 Present Value of an Annuity of $1 at Compound Interest Periods 1 2 3 4 5 6 7 8 9 4% 0.96154 1.88609 2.77509 3.62990 4.45182 5.24214 6.00205 6.73274 7.43533 8.11090 46% 0.95694 1.87267 2.74896 3.58753 4.38998 5.15787 5.89270 6.59589 7.26879 7.91272 5% 0.95238 1.85941 2.72325 3.54595 4.32948 5.07569 5.78637 6.46321 7.10782 7.72173 572% 0.94787 1.84632 2.69793 3.50515 4.27028 4.99553 5.68297 6.33457 6.95220 7.53763 6% 0.94340 1.83339 2.67301 3.46511 4.21236 4.91732 5.58238 6.20979 6.80169 7.36009 6%% 0.93897 1.82063 2.64848 3.42580 4.15568 4.84101 5.48452 6.08875 6.65610 7.18883 7% 0.93458 1.80802 2.62432 3.38721 4.10020 4.76654 5.38929 5.97130 6.51523 7.02358 10% 0.90909 1.73554 2.48685 3.16987 3.79079 4.35526 4.86842 5.33493 5.75902 6.14457 11% 0.90090 1.71252 2.44371 3.10245 3.69590 4.23054 4.71220 5.14612 5.53705 5.88923 12% 0.89286 1.69005 2.40183 3.03735 3.60478 4.11141 4.56376 4.96764 5.32825 5.65022 13% 0.88496 1.66810 2.36115 2.97447 3.51723 3.99755 442261 4.79677 5.13166 542624 10
