Total par value = $25,000,000

Stated interest rate = 1%

Effective / market rate = 3%

Issued on 1/1/X2

Due date 12/31/X6

Years to maturity = 5 years

Semi-annual interest

Interest accrues from January 1 through June 30 and is paid on July 1

AND

Interest accrues from July 1 through December 31 and is paid on January 1 (the next day)

Assume the bond is called on 7/1/X6 AFTER THE REGULAR PAYMENT

Called at 103%

Un-amortized bond discount at call date = $246,307

1. Calculate the VALUE (not par value) of the bond at acquisition date.

2. Calculate the CASH payment at each interest payment date.

3. Calculate INTEREST EXPENSE at the SECOND interest payment date.

4. Calculate the AMORTIZATION of the DISCOUNT or PREMIUM at the THIRD interest payment date.

5. Regarding the above question we are amortizing a:

6. Calculate the RE-ACQUISITION PRICE at the date of call.

7. Calculate the CARRYING VALUE at the date of call.

8. Calculate the GAIN or LOSS at the date of call.

9. Regarding the above question it is a: GAIN, LOSS, EITHER, NEITHER, ZERO?