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On January 1, 2021, Waterfall Lodge & Amusement Park issued $6,000,000 of 6% bonds, due in 10 years. The market interest rate for bonds of
On January 1, 2021, Waterfall Lodge & Amusement Park issued $6,000,000 of 6% bonds, due in 10 years. The market interest rate for bonds of similar risk and maturity is 7%. Interest is paid semiannually on June 30 and December 31 each year.
Bond Premium Problem: Assume that the market interest rate is 5.5% instead of 7%. Assume all other given amounts are the same as stated in the bond discount problem.
Stated interest rate per period | ||||||||||||||
Interest payment in Cash every 6 months | Blue cells can be typed in, yellow cells must be formulas or functions. | |||||||||||||
Market interest rate per period | Note: Hover your mouse to any cell with a red flad in the upper right hand corner to read the hint. | |||||||||||||
Number of periods | The data for this bond can be found in the word document "instructions" in the lab 2 modules in Canvas | |||||||||||||
Issue price | Note: All cells in the table should be formulas or functions ( dont just enter text) except the date column. You can type those in if you want. | |||||||||||||
Date | Cash Paid for Interest | Interest Expense | Increase in Carrying Value | Carrying Value (End of Period) | ||||||||||
1/1/21 | ------- | ------- | ------- | |||||||||||
6/30/21 | ||||||||||||||
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