Answer:
1.) $9,850
2.) $146,150
3.) see explanation
Explanation:
Amount of premium issue on the bond:
Sale price of bond - par value of bond
$409,850 - $400,000 = $9,850
2.)Total interest expense on bond over the life time of bond;
Repayment amount
Semiannual interest = (13%÷2) × $400,000
0.065 × 400,000 = $26,000
For three years :
$26,000 × 6 = $156,000
$156,000+$400,000(par value) =$556, 000
Total interest expense:
$556,000 - $409,850 = $146,150
3.)
S/annual PE- - - - unarmortized P------CV of bond
1/1/19 - - - - - - - - - 9,850 - - - - - - - - - - 409,850
30/6/19-------------- 8,208 - - - - - - - - - - 408, 208
31/12/19 - - - - - - - 6566 - - - - - - - - - - - 406566
30/6/20 - - - - - - -4924 - - - - - - - - - - - 404924
31/12/20 - - - - - - 3282 - - - - - - - - - - - 403282
30/6/21 - - - - - - - 1640 - - - - - - - - - - - - 401640
31/12/21 - - - - ------ 0 - - - - - - - - - - - - - 400000
S/annual PE = Semiannual payment end
Unarmortized P = Unarmortized premium
CV of bond = carrying value of bond