III. On January 1, 2018, Piper Co. issued ten-year bonds with a face value of $6,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:

Present value of 1 for 10 periods at 10% ................................... .386

Present value of 1 for 10 periods at 12% ................................... .322

Present value of 1 for 20 periods at 5% ..................................... .377

Present value of 1 for 20 periods at 6% ..................................... .312

Present value of annuity for 10 periods at 10% .................................6.145

Present value of annuity for 10 periods at 12% ......................... 5.650

Present value of annuity for 20 periods at 5% ........................... 12.462

Present value of annuity for 20 periods at 6% ........................... 11.470

Instructions

(a)Calculate the issue price of the bonds. (10 points)

(b)Without prejudice to your solution in part (a), assume that the issue price was $4,520,000. Prepare the amortization table for 2018, assuming that amortization is recorded on interest payment dates using the effective-interest method.(15 points)