Question

Weighted-Average Interest Rate at
	February 3, 2012	February 3, 2012	January 28, 2011
Secured debt: 1
Mortgage notes due through fiscal 2027	0.05%	$20	$17
Unsecured debt:
Notes due through fiscal 2016	4.61%	2,070	2,068
Notes due fiscal 2017-2021	4.34%	1,767	1,269
Notes due fiscal 2022-2026	8.20%	15	15
Notes due fiscal 2027-2031	6.76%	812	812
Notes due fiscal 2032-2036	5.64%	940	939
Notes due fiscal 2037-20412	5.94%	1,585	1,089
Capitalized lease obligations due through fiscal 2035		418	364
Total long-term debt		7,627	6,573
Less current maturities		(592)	(36)
Long-term debt, excluding current maturities		$7,035	$6,537

¹ Real properties with an aggregate book value of $67 million were pledged as collateral at February 3, 2012, for secured debt.

² Amount includes $100 million of notes issued in 1997 that may be put at the option of the holder on the 20th anniversary of the issue at par value. None of these notes are currently puttable.

1. Assume that the Notes due fiscal 2032-2036 outstanding at the beginning of current the year were 5.64% notes issued to yield 5.8%. At the beginning of the current year, these notes had an unamortized discount of $11 million. What cash interest payment did Company make for these notes? What interest expense did Company record for these notes during the current year?

Answer 1

As question contains multiple question answered first one only

based on value given in the issue:

Calculation of interest during the year= weighted average rate of interest * amt outstanding during the year

Secured debt: 1

= 0.05% * 20

=0.01

Unsecured debt:

Particular	rate	amt o/s as on 03-02-2012	interest
Notes due through fiscal 2016	4.61%	2,070	95.43
Notes due fiscal 2017-2021	4.34%	1,767	76.69
Notes due fiscal 2022-2026	8.20%	15	1.23
Notes due fiscal 2027-2031	6.76%	812	54.89
Notes due fiscal 2032-2036	5.64%	940	53.02
Notes due fiscal 2037-20412	5.94%	1,585	94.15
total			375.41

Total cash interest expense= 0.01+375.41=375.42

Note:

1. Interest for Capitalized lease obligations due through fiscal 2035 will not be paid in cash during the year and will be capitalized till maturity or will be paid on scheduled date if any.

2. its assumed that additional amt for notes due during fiscal 2016, 2017-2021, 2032-2036, 2037-2041 and secured date raised at start of the year in absence of particular date of raise of additional fund.