What method are you using to calculate present values (SELECT ONE):

present value tables Excel financial calculator

1. On January 1, 2019, Sager Company issued 10% annual coupon rate bonds with a face amount of $500,000 for $648,775. The bonds mature in 10 years. The annual market rate of interest is 6%. Interest is paid semiannually on June 30 and December 31.

Write the transactions for the following events:

1. Bond issuance
2. The first interest payment on June 30, 2019
3. The second interest payment on December 31, 2019
4. Immediately after the second interest payment, on January 1, 2020, the bonds are retired in cash for $530,000.

Balance Sheet

Income Statement

Cash Asset

+

Noncash Assets

=

Liabil- ities

+

Contrib. Capital

+

Earned Capital

Rev- enues

Expen- ses

=

Net Income

(a)

+

=

+

+

=

(b)

+

=

+

+

=

(c)

+

=

+

+

=

(d)

-

+

=

+

+

=

2. Now assuming the bond above is issued with the same characteristics but with an annual market rate of interest of 12%, what would be the amount of the initial Bond Payable liability (in other words the Price of the Bond at issuance)?