Help! :) On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value...
Help! :) On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value of $6.7 million for cash. The bonds mature in 12 years and were issued at a price of $3,329,699. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Q. What total interest expense will Morton Sales Co. report over the 12 year life of these bonds? (Enter your answer in whole dollars.)
Homework Answers
Answer:
Calculation of zero Coupon Bond
Basically Zero Coupon bond issued at a discounted price.
Calculation of total interest Amount
| Face Value of Bond | $6,700,000 |
| :Less: Issue Price of Bond | -$3,329,699 |
| Total Interest / Discount | $3,370,301 |
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