Homework Answers
| Coupon Rate per period | 9% | ||||
| Period | 5 | ||||
| Effective/Market rate per period | 11.0% | ||||
| Bond amount | $1,054,800 | ||||
| Period | Cashflows | Present value | Calculation | ||
| 1 | $94,932 | $85,524 | (94932/(1+0.11)^1) | ||
| 2 | $94,932 | $77,049 | (94932/(1+0.11)^2) | ||
| 3 | $94,932 | $69,413 | (94932/(1+0.11)^3) | ||
| 4 | $94,932 | $62,535 | (94932/(1+0.11)^4) | ||
| 5 | $1,149,732 | $682,310 | (1149732/(1+0.11)^5) | ||
| $976,831 | |||||
| 1 | Cash received from the loan | $976,831 | |||
| 2 | Date | Cash received | Interest revenue | Increase in carrying amount | Carrying amount of Note |
| 12/31/2020 | $976,831 | ||||
| 12/31/2021 | $94,932 | $107,451 | $12,519 | $989,350 | |
| (976831*11%) | |||||
| 12/31/2022 | $94,932 | $108,829 | $13,897 | $1,003,247 | |
| (989,350*11%) | |||||
*If you have any doubt feel free to ask in the comment section. Please give your valuable feedback.
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