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Please explain how you get these answers Berkley Bank has S600,000 of 5% debenture bonds outstanding. The bonds were issued at 101 in 2018 and
Please explain how you get these answers
Berkley Bank has S600,000 of 5% debenture bonds outstanding. The bonds were issued at 101 in 2018 and mature in 2038. The bonds have annual interest payments. Read the requirements Requirement 1. How much cash did Berkley Bank receive when it issued these bonds? Berkley Bank received S 608,000 at bond issuance. Requirement 2. How much cash in total will Berkley Bank pay the bondholders through the maturity date of the bonds? Berkley Bank will pay the bondholders S 1.200,000 through the maturity date of the bonds. Requirement 3. Calculate the difference between your answers to requirements 1 and 2. This difference represents Berkley Bank's total interest expense over the life of the bonds. The difference between your answers to requirements 1 and 2 is $ 594.000 Requirement 4. Compute Berkley 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. 29,700 Berkley 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 $ 594,000 Is your 20-year total the same as your answer to requirement 3? YesStep by Step Solution
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