Question

Please use excel and show the function inputs Using the Excel PV function, determine the proceeds of the bond issuance assuming a 6 percent effective (market) annual interest rate. (This was step 2)

On January 1, 2018, the Blue Devil Corporation issued $100,000 of ten-year bonds. The bonds carried a stated annual interest rate of 5 percent, with interest payable semiannually on June 30 and December 31.

Answer 1

Table values are based on:
n=	20	4500000
i=	2.0%
Cash Flow	Table Value	Amount	Present Value
PV of Interest	16.35143	$2,500	$40,879
PV of Principal	0.67297	$1,00,000	$67,297
PV of Bonds Payable			$1,08,176
Premium on Bonds Payable =$108,176 - $100,000 =$8,176
Amortization table
	Col I	Col II	Col III	Col IV
Date	Interest Payment($100,000*2.5%)	Interest expenses(Col IV*2%)	Premium amorrtization(Col I -Col II)	Bond carrying amount
01-Jan-18				1,08,176
30-Jun-18	2,500	2,164	336	1,07,839
31-Dec-18	2,500	2,157	343	1,07,496
30-Jun-19	2,500	2,150	350	1,07,146
31-Dec-19	2,500	2,143	357	1,06,789
30-Jun-20	2,500	2,136	364	1,06,424
31-Dec-20	2,500	2,128	372	1,06,053
30-Jun-21	2,500	2,121	379	1,05,674
31-Dec-21	2,500	2,113	387	1,05,288
30-Jun-22	2,500	2,106	394	1,04,893
31-Dec-22	2,500	2,098	402	1,04,491
30-Jun-23	2,500	2,090	410	1,04,081
31-Dec-23	2,500	2,082	418	1,03,663
30-Jun-24	2,500	2,073	427	1,03,236
31-Dec-24	2,500	2,065	435	1,02,801
30-Jun-25	2,500	2,056	444	1,02,357
31-Dec-25	2,500	2,047	453	1,01,904
30-Jun-26	2,500	2,038	462	1,01,442
31-Dec-26	2,500	2,029	471	1,00,971
30-Jun-27	2,500	2,019	481	1,00,490
31-Dec-27	2,500	2,010	490	1,00,000