On $1/1/$Y$1,$ Sawyer Inc. purchases $15-$year bonds worth $$300,000$ principal amount with an $8\mathrm{.}25\%$ annual coupon rate. The bonds make interest payments on $12/31$ of each year. The market rate of interest for bonds such as these on $1/1/$Y$1$ is $7\mathrm{.}50\%.$ Sawyer Inc. accounts for these bonds using the effective interest method and prepares financial statements once each year on $12/31.$

$1)$ Construct an $($expected$)$ amortization table for these bonds over their expected life $($i$.$e$.,$ from purchase through maturity$).$ Your table should include $($at least$)$ the following columns $($you can leave a cell missing if it is not applicable$)$:

a$.$ Period end date

b$.$ Interest revenue for the period

c$.$ Cash payment for the period

d$.$ Change in book value

e$.$ Ending book value

$2)$ Assume that on $12/31/$Y$9($after the coupon payment is made$),$ that market interest rate for similar bonds increases to $8\mathrm{.}50\%.$

a$.$ Calculate the market value of the bond on $12/31/$Y$9$ and clearly label it$.$

b$.$ Copy your amortization table from question $1$ and make any adjustments to the table that Sawyer Inc. would need to make for this change $($in Y$9$ until maturity$)$ if they use current value accounting. Make sure you clearly label the new amortization table $$Question $2$ table.$$

$3)$ Assume that on $12/31/$Y$12($after the coupon payment is made$),$ that market interest rate for similar bonds decreases to $6\mathrm{.}50\%.$

a$.$ Calculate the market value of the bond on $12/31/$Y$12$ and clearly label it$.$

b$.$ Copy your amortization table from question $2$ and make any adjustments to the table that Sawyer Inc. would need to make for this change $($in Y$12$ until maturity$)$ if they use current value accounting. Make sure you clearly label the new amortization table $$Question $3$ table.$$

$4)$ Given the changes in the market interest rates outlined in questions $2$ and $3,$ plot the carrying value of the bond investment from $12/31/$Y$1$ through $12/31/$Y$15$ assuming Sawyer Inc. $($a$)$ uses historical cost accounting, and b$)$ uses current value accounting. Include both lines on the same figure and clearly label all aspects of your graph.