Question
Cowen corporation issued $560,000 of 5%, 12-year bonds payable on March 31, 2016. The market interest rate at the date of issuance was 10%, and
Cowen corporation issued $560,000 of 5%, 12-year bonds payable on March 31, 2016. The market interest rate at the date of issuance was 10%, and the Cowen corporation bonds pay interest semiannually. Cowen's year-end is March 31. Using the following amortization table for Cowen's bonds, answer the questions below. 1. How much cash did cowen corporation borrow on March 31, 2016? How much cash will cowen corporation pay back at maturity on MArch 31, 2028? 2. How much cash interest will cowen corporation pay each 6 months? 3. How much interest expense will cowen corporation report on September 30, 2016, and on March 31, 2017? Why does the amount of interest expense increase each period?
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