Present Value of an Annuity On January 1, you win 580,000 in the state lottery. The $350,000 price will be paid in equal installment of $110.000 mars. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 6% demine the present your winning the rest value Exhibit 2. Round to the nearest whole dolar Present Value of Amounts Due Assume that you are going to receive $460,000 in 10 years. The current market rate of interest is 5% a. Using the present value of $1 table in Exhibit S, determine the present value of this amount compounded annually. Round to the nearest whole dollar b. Why is the present value less than the $460,000 to be received in the future? The present value is less due to over the 10 years. Entries for Issuing and Calling Bonds: Loss Hoover Corp., a wholesaler of music equipment, Issued $13,200,000 of 25-year, 9% callable bonds on March 1, 2012, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. 2012 Mar. 1 issued the bonds for cash at their face amount Sept. 1 Paid the interest on the bonds. 2014 Sept. 1 Called the bond issue at 104, the rate provided in the bond Indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank Journalize the entries to record the above selected transactions, Issued the bonds for cash at their face amount 2012 Mar, 1 Cash 13.200.000 Bonds Payable 13.200.000 Paid the interest on the bonds. 2012 Sept. 1 Interest Expense 59,000 Cash Called the bond issue at 104, the rate provided in the bond indenture. (Omit entry for payment of interest.) 2014 Sept. 1 Bonds Payable Loss on Redemption of Bonds Cash Entries for issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $22,600,000 of five year, 8% bonds to finance its operations of producing and selling home improvement products, Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Chin receiving cash of $21,705,917. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar) 3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar) 17 an amount box does not require an entry, leave it blank. 1 Cash 21.705,917 Discount on Bonds Payable Bonds Payable 22.600.000 2. Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on Bonds Payable Cash b. Determine the amount of the band interest expense for the first year Why was that he is the home for the then for the rest on couldng in Chin receiving mash of $21,705,917 a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount is combined with the semiannual Interest payment. (Round your answer to the nearest dollar) 3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) If an amount box does not require an entry, leave it blank. 1. Cash 21,705,917 Discount on Bonds Payable Bonds Payable 22,600,000 Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on Bonds Payable Cash b. Determine the amount of the band Interest expense for the first year. c. Why was the company able to issue the bonds for only $21,705,917 rather than for the face amount of $22,600,000? The market rate of interest is the contract rate of interest. Therefore, inventors bonds willing to pay the full face amount of the