Federal Bank has $$400,000$ of $8\%$ debenture bonds outstanding. The bonds were issued at $101$ in $2021$ and mature in $2041.$ The bonds have annual interest payments.

Read the requirements.

Requirement $1.$ How much cash did Federal Bank receive when it issued these bonds?

At the time the bonds were issued, Federal Bank received cash of

Requirement $2.$ How much cash in total will Federal Bank pay the bondholders through the maturity date of the bonds?

Through the maturity date of the bonds, Federal Bank will pay the bondholders total cash of

Requirement $3.$ Calculate the difference between your answers to requirements $1$ and $2.$ This difference represents Federal Bank' $9$ total interest expense over the life of the bonds.

The difference between your answers to requirements $1$ and $2$ is

Requirement $4.$ Compute Federal Bank's annual interest expense using the straight$-$line amortization method. Multiply this amount by $20.$ Your $20-$year total should be the same as your answer to requirement $3.$

Federal Bank's annual interest expense using the straight$-$line amortization method is

Multiply the annual interest expense by $20.$

The $20-$year straight$-$line interest total is

Is your $20-$year total the same as your answer to requirement $3?$