Answer:
$527,737
Explanation:
The Bond Payment or Coupon always includes the Interest Portion and the the Capital Potion. The question only requires the Interest Portion of the Bond.
The Bond Parameters can be set as :
<em>PV = - $5,259,870</em>
<em>FV = $5,700,000</em>
<em>PMT = ($5,700,000 x 8%) ÷ 2 = $228,000</em>
<em>N = 5 x 2 = 10</em>
<em>YTM = 10 %</em>
<em>P/YR = 2</em>
Constructing an amortization schedule for 2020 gives :
Date Capital Portion Interest Balance
June 30 $34,994 $262,994 $5,294,864
Dec 30 $36,743 $264,743 $5,331,607
Total $71,737 $527,737 $5,331,607
therefore,
The amount of interest expense to be reported for 2020 is $527,737
