Q1. Calculate the present value of the bond and prepare amortization table if the market interest rate is 4% instead of 6%.

Q2. Calculate the present value of the bond and prepare amortization table if the market interest rate is 10% instead of 6%.

Q3. Using each of the amortization tables in question 1 and 2 above, state the amounts to be included in the profit and loss account as interest expenses, and balance sheet as bond balance at amortized cost for 12/31/2023 for each table separately.

Illustration Alltech Corporation on January 1, 2020, issues $100,000 of 5% bonds due in 5 years with interest payable annually at yearend. The current market rate of interest for bonds of similar risk is 6%. What will the buyers pay for this bond issue