Your parents bought their first car for $5,000. the price level in the year your parents bought their car was 50, while the pric
1 answer:
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Answer:
B. $3,373
Explanation:
The computation is given below:
For Held- to -Maturity investment
Face Value of the bond = 100,000
Coupon rate = 6%, for Semi-annual Period should 6% ÷ 2 = 3%
Effective rate = 7% For Semi-annual Period should be 7% ÷ 2 = 3.5%
Now
Purchase Price of the Bond is
= 100,000 - 4000
= 96,000
Now
First interest :
Cash interest = 100,000 × 3% = 3,000
interest Revenue = 96,000 × 3.5% = 3,360
So,
Discount Amortized is
= 3360 - 3,000
= 360
And,
Carrying Value of the Bond should be
= 96,000 + 360
= 96,360
For Second YEar
Interest Revenue = Carrying Value Effective interest Rate
= 96,360 × 3.5%
= 3,372.6
= $3,373
