Answer:
Legacy
The total bond interest expense to be recognized over the bond's life is:
= $189,172.82
Explanation:
a) Data and Calculations:
Face value of 5.5% bonds issued = $660,000
Proceeds from the bonds issue = 648,412
Bonds discounts = $11,588
Interest payment = semiannually at 2.75% (5.5%/2)
Market interest rate = 6%
Effective semiannual interest rate = 3% (6%/2)
N (# of periods) 8
I/Y (Interest per year) 3
PV (Present Value) 648412
PMT (Periodic Payment) 18150
Results
FV = $982,784.82
Sum of all periodic payments = $145,200.00
Total Interest = $189,172.82
