Question

Determine the total interest expense for 20Y1. Enter amount as a positive number.

Answer 1

Face Value of Bonds: $50,000,000

Issued Value: $43,768,920

Discount on Bonds: 50,000,000 - 43,768,920 = $6,231,080

Amortization of Discount: 6,231,080 / 10 * 6/12 = $311,554

Semi Annual Interest Payment: $50,000,000 x 8% x 6/12 = $2,000,000

Total Interest = $2,000,000 + $311,554 = $2,311,554

                                           

Answer 2

Answer:

Face Value of Bonds: $50,000,000

Issued Value: $43,768,920

Discount on Bonds: 50,000,000 - 43,768,920 = $6,231,080

Amortization of Discount: 6,231,080 / 10 * 6/12 = $311,554

Semi Annual Interest Payment: $50,000,000 x 8% x 6/12 = $2,000,000

Total Interest = $2,000,000 + $311,554 = $2,311,554

Step-by-step explanation: