Question

1) Enviro Company issues 8%, 10-year bonds with a par value of $320,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1⁄2. The straight-line method is used to allocate interest expense.
   

What total amount of bond interest expense will be recognized over the life of these bonds?
  

Answer is not complete. ( I really need help filling this chart out correctly, thank you!)

	Total Bond Interest Expense Over Life of Bonds: Amount repaid: not attempted payments of not attempted Par value at maturity not attempted Total repayments 0 Less amount borrowed (from part 1) 280,000selected answer correct Total bond interest expense $(280,000)

2) Enviro Company issues 10.00%, 10-year bonds with a par value of $420,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.00%, which implies a selling price of 127 5/8. The straight-line method is used to allocate interest expense.
   

What total amount of bond interest expense will be recognized over the life of these bonds?

	Total Bond Interest Expense Over Life of Bonds: Amount repaid: not attempted payments of not attempted Par value at maturity not attempted Total repayments 0 Less amount borrowed (from part 1) 536,025selected answer correct Total bond interest expense $(536,025)

(Also, need help with this question and filling out this chart!)

THANK YOU!!   

Answer 1

a) Calculate total bond interest expense :

Amount repaid
20 Payment of 12800	256000
par value of maturity	320000
Total repayments	576000
Less: Amount borrowed	-280000
total bond interest expense	296000

b) Calculate total bond interest expense :

Amount repaid
20 Payment of 21000	420000
par value of maturity	420000
Total repayments	840000
Less: Amount borrowed	-536025
total bond interest expense	303975