On July 1, 2021, Reddington Company issued bonds paying interest semiannually on June 30 and December...
On July 1, 2021, Reddington Company issued bonds paying interest semiannually on June 30 and December 31 of each year at a coupon rate of 8%. At the issuance date, the market demands a 7% rate of return for bonds from a company with Reddington's creditworthiness and similar maturity. The bonds mature in 40 years on June 30, 2061, in the amount of $100,000,000.
Required: Prepare a bond amortization schedule on excel in good form for these bonds using appropriate excel formulas.
*Please make one work sheet with the amortization schedule and one showing the formulas
Homework Answers
Answer :
| Computation of bond price | |||
| Table values are based on | |||
| n = | 80 | ||
| i = | 3.50% | ||
| Cash flow | Table value | Amount | Present Value |
| Par (Maturity) value | 0.06379 | $100,000,000.00 | $6,379,285 |
| Interest (Annuity) | 26.74878 | $4,000,000.00 | $106,995,103 |
| Price of bonds | $113,374,388 | ||
| Bond Amortization Schedule | |||||
| Semiannual period | Cash interest | Interest Expense | Premium amortized | Unamortized Premium | Carrying value |
| Issue date | $13,374,388 | $113,374,388 | |||
| 1 | $4,000,000 | $3,968,104 | $31,896 | $13,342,492 | $113,342,492 |
| 2 | $4,000,000 | $3,966,987 | $33,013 | $13,309,479 | $113,309,479 |
| 3 | $4,000,000 | $3,965,832 | $34,168 | $13,275,311 | $113,275,311 |
| 4 | $4,000,000 | $3,964,636 | $35,364 | $13,239,946 | $113,239,946 |
| 5 | $4,000,000 | $3,963,398 | $36,602 | $13,203,345 | $113,203,345 |
| 6 | $4,000,000 | $3,962,117 | $37,883 | $13,165,462 | $113,165,462 |
| 7 | $4,000,000 | $3,960,791 | $39,209 | $13,126,253 | $113,126,253 |
| 8 | $4,000,000 | $3,959,419 | $40,581 | $13,085,672 | $113,085,672 |
| 9 | $4,000,000 | $3,957,999 | $42,001 | $13,043,670 | $113,043,670 |
| 10 | $4,000,000 | $3,956,528 | $43,472 | $13,000,199 | $113,000,199 |
| 11 | $4,000,000 | $3,955,007 | $44,993 | $12,955,206 | $112,955,206 |
| 12 | $4,000,000 | $3,953,432 | $46,568 | $12,908,638 | $112,908,638 |
| 13 | $4,000,000 | $3,951,802 | $48,198 | $12,860,440 | $112,860,440 |
| 14 | $4,000,000 | $3,950,115 | $49,885 | $12,810,555 | $112,810,555 |
| 15 | $4,000,000 | $3,948,369 | $51,631 | $12,758,925 | $112,758,925 |
| 16 | $4,000,000 | $3,946,562 | $53,438 | $12,705,487 | $112,705,487 |
| 17 | $4,000,000 | $3,944,692 | $55,308 | $12,650,179 | $112,650,179 |
| 18 | $4,000,000 | $3,942,756 | $57,244 | $12,592,936 | $112,592,936 |
| 19 | $4,000,000 | $3,940,753 | $59,247 | $12,533,688 | $112,533,688 |
| 20 | $4,000,000 | $3,938,679 | $61,321 | $12,472,367 | $112,472,367 |
| 21 | $4,000,000 | $3,936,533 | $63,467 | $12,408,900 | $112,408,900 |
| 22 | $4,000,000 | $3,934,312 | $65,688 | $12,343,212 | $112,343,212 |
| 23 | $4,000,000 | $3,932,012 | $67,988 | $12,275,224 | $112,275,224 |
| 24 | $4,000,000 | $3,929,633 | $70,367 | $12,204,857 | $112,204,857 |
| 25 | $4,000,000 | $3,927,170 | $72,830 | $12,132,027 | $112,132,027 |
| 26 | $4,000,000 | $3,924,621 | $75,379 | $12,056,648 | $112,056,648 |
| 27 | $4,000,000 | $3,921,983 | $78,017 | $11,978,631 | $111,978,631 |
| 28 | $4,000,000 | $3,919,252 | $80,748 | $11,897,883 | $111,897,883 |
| 29 | $4,000,000 | $3,916,426 | $83,574 | $11,814,309 | $111,814,309 |
| 30 | $4,000,000 | $3,913,501 | $86,499 | $11,727,809 | $111,727,809 |
| 31 | $4,000,000 | $3,910,473 | $89,527 | $11,638,283 | $111,638,283 |
| 32 | $4,000,000 | $3,907,340 | $92,660 | $11,545,623 | $111,545,623 |
| 33 | $4,000,000 | $3,904,097 | $95,903 | $11,449,719 | $111,449,719 |
| 34 | $4,000,000 | $3,900,740 | $99,260 | $11,350,460 | $111,350,460 |
| 35 | $4,000,000 | $3,897,266 | $102,734 | $11,247,726 | $111,247,726 |
| 36 | $4,000,000 | $3,893,670 | $106,330 | $11,141,396 | $111,141,396 |
| 37 | $4,000,000 | $3,889,949 | $110,051 | $11,031,345 | $111,031,345 |
| 38 | $4,000,000 | $3,886,097 | $113,903 | $10,917,442 | $110,917,442 |
| 39 | $4,000,000 | $3,882,110 | $117,890 | $10,799,552 | $110,799,552 |
| 40 | $4,000,000 | $3,877,984 | $122,016 | $10,677,537 | $110,677,537 |
| 41 | $4,000,000 | $3,873,714 | $126,286 | $10,551,251 | $110,551,251 |
| 42 | $4,000,000 | $3,869,294 | $130,706 | $10,420,544 | $110,420,544 |
| 43 | $4,000,000 | $3,864,719 | $135,281 | $10,285,263 | $110,285,263 |
| 44 | $4,000,000 | $3,859,984 | $140,016 | $10,145,248 | $110,145,248 |
| 45 | $4,000,000 | $3,855,084 | $144,916 | $10,000,331 | $110,000,331 |
| 46 | $4,000,000 | $3,850,012 | $149,988 | $9,850,343 | $109,850,343 |
| 47 | $4,000,000 | $3,844,762 | $155,238 | $9,695,105 | $109,695,105 |
| 48 | $4,000,000 | $3,839,329 | $160,671 | $9,534,434 | $109,534,434 |
| 49 | $4,000,000 | $3,833,705 | $166,295 | $9,368,139 | $109,368,139 |
| 50 | $4,000,000 | $3,827,885 | $172,115 | $9,196,024 | $109,196,024 |
| 51 | $4,000,000 | $3,821,861 | $178,139 | $9,017,884 | $109,017,884 |
| 52 | $4,000,000 | $3,815,626 | $184,374 | $8,833,510 | $108,833,510 |
| 53 | $4,000,000 | $3,809,173 | $190,827 | $8,642,683 | $108,642,683 |
| 54 | $4,000,000 | $3,802,494 | $197,506 | $8,445,177 | $108,445,177 |
| 55 | $4,000,000 | $3,795,581 | $204,419 | $8,240,758 | $108,240,758 |
| 56 | $4,000,000 | $3,788,427 | $211,573 | $8,029,185 | $108,029,185 |
| 57 | $4,000,000 | $3,781,021 | $218,979 | $7,810,206 | $107,810,206 |
| 58 | $4,000,000 | $3,773,357 | $226,643 | $7,583,564 | $107,583,564 |
| 59 | $4,000,000 | $3,765,425 | $234,575 | $7,348,988 | $107,348,988 |
| 60 | $4,000,000 | $3,757,215 | $242,785 | $7,106,203 | $107,106,203 |
| 61 | $4,000,000 | $3,748,717 | $251,283 | $6,854,920 | $106,854,920 |
| 62 | $4,000,000 | $3,739,922 | $260,078 | $6,594,842 | $106,594,842 |
| 63 | $4,000,000 | $3,730,819 | $269,181 | $6,325,662 | $106,325,662 |
| 64 | $4,000,000 | $3,721,398 | $278,602 | $6,047,060 | $106,047,060 |
| 65 | $4,000,000 | $3,711,647 | $288,353 | $5,758,707 | $105,758,707 |
| 66 | $4,000,000 | $3,701,555 | $298,445 | $5,460,262 | $105,460,262 |
| 67 | $4,000,000 | $3,691,109 | $308,891 | $5,151,371 | $105,151,371 |
| 68 | $4,000,000 | $3,680,298 | $319,702 | $4,831,669 | $104,831,669 |
| 69 | $4,000,000 | $3,669,108 | $330,892 | $4,500,777 | $104,500,777 |
| 70 | $4,000,000 | $3,657,527 | $342,473 | $4,158,305 | $104,158,305 |
| 71 | $4,000,000 | $3,645,541 | $354,459 | $3,803,845 | $103,803,845 |
| 72 | $4,000,000 | $3,633,135 | $366,865 | $3,436,980 | $103,436,980 |
| 73 | $4,000,000 | $3,620,294 | $379,706 | $3,057,274 | $103,057,274 |
| 74 | $4,000,000 | $3,607,005 | $392,995 | $2,664,279 | $102,664,279 |
| 75 | $4,000,000 | $3,593,250 | $406,750 | $2,257,528 | $102,257,528 |
| 76 | $4,000,000 | $3,579,013 | $420,987 | $1,836,542 | $101,836,542 |
| 77 | $4,000,000 | $3,564,279 | $435,721 | $1,400,821 | $101,400,821 |
| 78 | $4,000,000 | $3,549,029 | $450,971 | $949,850 | $100,949,850 |
| 79 | $4,000,000 | $3,533,245 | $466,755 | $483,094 | $100,483,094 |
| 80 | $4,000,000 | $3,516,906 | $483,094 | $0 | $100,000,000 |
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