Question
TeslaShock Corporation manufactures electrical test equipment. The company's board of directors authorized a bond issue on January 1 of this year with the following terms:
TeslaShock Corporation manufactures electrical test equipment. The company's board of directors authorized a bond issue on January 1 of this year with the following terms: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)
Face (par) value: $806,000
Coupon rate: 8 percent payable each December 31
Maturity date: December 31, end of Year 5
Annual market interest rate at issuance: 12 percent
Required:
1. Compute the bond issue price.
2. Assume that the company used the straight-line amortization method. Compute the following for Year 1 through Year 5:
Year 1 Year 2 Year 3 Year 4 Year 5 a. Cash payment for bond interest. b. Amortization of bond discount or premium. c. Bond interest expenseStep by Step Solution
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