Problem 3: Bond pricing, Interest and Payment (20 points)

A) Calculate the sales price of the following bonds (interest pays semi-annually):

i) $10,000,000 ten-years note, annual coupon rate 10%, annual market rate 12%

ii) $5,000,000 five-years note, annual coupon rate 10%, annual market rate 8%

B) What is the interest expense and interest payment at the end of the first two payment periods for each bond?

C) Complete the transactions for the semi-annual payments and amortization of discount/premium using the Financial Statement Effects Template for the first years of each bond.

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