1. Higgins, Inc., has a fiscal year end of December 31. The company issues $400,000, 8%, 5-year bonds on January 1, 20Y5. The bonds pay interest semiannually on June 30 and December 31 of each year.
Assume the bonds are issued at a premium for $434,121, that is, when the market rate of interest is 6%.
Create an amortization table for a 5-year period.
Question 2
Higgins, Inc., has a fiscal year end of December 31. The company issues $400,000, 8%, 5-year bonds on January 1, 20Y5. The bonds pay interest semiannually on June 30 and December 31 of each year.
- Assume the bonds are issued at a premium for $434,121 (i.e., when the market rate of interest is 6%).
Use your amortization table and complete the FSET for the following transactions:
- Issuance of the bonds
- Payment of coupons for each of the 5 years
- Retirement of bonds on December 31, 20Y9
- Question3
Phelps Swimming leases a delivery truck from Ryder Trucks by signing a 5-year lease with an annual payment of $3,256 due at the end of each year, based on 8% interest. The present value of the lease payments is $13,000. Create an amortization table showing six columns:
Year
Beginning-year lease liability
Interest
Payment
Principal repayment
Ending-year lease liability
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