Answer:
1.- cash proceeds <em>$308,473.5</em>
2.- Interest Expense <em>141526.5</em>
3.- Bond interest expense on first payment<em> 7076.33</em>
Explanation:
1.-
Notice that it is (123 + 3/8) is a percent (%) that's why is important to divide by 100
2.-
308,473.5 - 250,000 = 58473.5 premium on bonds
This decrease the interest expense from the cash proceeds
Cash proceeds
250,000 * 0.04 * 20 = 200,000
- Amortization on Premium (58473.5)
Interest Expense <em><u>141526.5</u></em>
3.-
It will use <u>striaght-line method so</u>
10 years * 2 payment per year = 20 payment in the lifetime of the bond
58473.5/20 = 2923.67
Cash proceeds - Premimun = Interest Expense
10,000 - 2923.67 = 7076.33