Silver Company issues bonds payable on January 1, 2020. Here are the details:

stated interest rate = 4%; market interest rate will vary, below

principal (face value) = $50,000,000; maturity date: December 31, 2023

the bonds go for ? years; interest is paid once a year, at the end of the year

A. Assume the Market Interest Rate is 3%

1. Compute the present value of the cash flows, which is the same as the issue price for the bonds payable

PLEASE SHOW FORMULAS USED FOR HIGHLIGHTED YELLOW CELLS.

$ Market rate 3% Par Value Interest Stated Market Interest Periods Interest 50,000,000.00 4% 3% 4 $ 2,000,000.00 n = 4 Cash Flow Table Value Par (maturity value) Interest (annuity) Dollar Price 3 Amount Present Value 50,000,000.00 $ $ 2,000,000.00 $ 0 Bond Amoritization Date Cash Interest Interest Expense 4% Discount Amoritization Bond Value 1/1/20 $ 12/31/20 $ 2,000,000.00 12/31/21 $ 2,000,000.00 12/31/22 $ 2,000,000.00 12/31/23 $ 2,000,000.00 TOTAL $ 8,000,000.00 $ 0 $ Market rate 3% Par Value Interest Stated Market Interest Periods Interest 50,000,000.00 4% 3% 4 $ 2,000,000.00 n = 4 Cash Flow Table Value Par (maturity value) Interest (annuity) Dollar Price 3 Amount Present Value 50,000,000.00 $ $ 2,000,000.00 $ 0 Bond Amoritization Date Cash Interest Interest Expense 4% Discount Amoritization Bond Value 1/1/20 $ 12/31/20 $ 2,000,000.00 12/31/21 $ 2,000,000.00 12/31/22 $ 2,000,000.00 12/31/23 $ 2,000,000.00 TOTAL $ 8,000,000.00 $ 0