Answer:
The carrying value at year three end is $115,000.
Explanation:
The bond amortization schedule shows the how the interest expense is calculated as well as the coupon payment at each year end.
The carrying value at each year end is the opening carrying value in that year plus interest expense(as % of opening carrying value) minus the coupon payment(as % of face value).
In the beginning carrying value is the price the bond was issued,which could be computed using the pv formula in excel.
=-pv(rate,nper,pmt,fv)
the rate is yield to maturity of 5%
nper is the number of coupon payments to be made by the bond,which is 3
pmt is the yearly coupon payment which is:$115,000*4%=$4,600
fv is the face value of $115,000
=-pv(5%,3,4600,115000)=$111,868.26
Find attached amortization schedule.
