REQUIRED:

1. What is the face amount of the bonds?

2. What is the initial selling price of the bonds?

3. What is the term to maturity in years?

4. Interest is determined by what approach? (effective interest rate OR straight line approach)

5. What is the stated annual interest rate?

6. What is the effective annual interest rate?

7. What is the total cash interest paid over the term to maturity?

8. What is the total effective interest expense recorded over the term to maturity?

On January 1, 2016, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Effective Increase in Outstanding Payment Payment Interest Balance Balance 6,015,542 15,622 225,000 6,031,164 240,622 16,247 225,000 241,247 225,000 241,896 6,047,411 16,896 6,064,307 6,081,879 225,000 242,572 17,572 225,000 6,100,154 243,275 18.275 225,000 244,006 19,006 6,119,160 7,358,543 66,675 225,000 291,675 7,427,885 39 225,000 294,342 69,342 40 225,000 297,115 72,115 7,500,000