What is the calculation to find the discount amt of $5,509.25? $100,000 Bond, 12

Question

What is the calculation to find the discount amt of $5,509.25? $100,000 Bond, 12 %, market rate 13%. Thanks.

(straight-line amortization is illustrated in Appendix A) can be summariz Bond Discount Amortization Table Interest Expense Interest Payment (Carrying Bonds (Face x 0.12 ment mber Value × 0.13 × 6/12) Amortization Payable Period End ×6/12) of Discount Discount Face Value 1 7/1/20X1 1/1/20X2 3 7/1/20X2 4 1/1/20X3 5 7/1/20X3 6 1/1/20X4 7 7/1/20X4 1/1/20X5 9 7/1/20X5 10 1/1/20x6 7/1/20x6 12 1/1/20x7 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,141.90 6,151.12 6,160.94 6,171.41 6,182.55 6,194.41 6,207.05 6,220.51 6,234.84 6,250.11 6,266.36 6,283.68 (5,509.25) 100,000 141.90 (5,367.36) 100,000 (5,216.23) 100,000 160.94 (5,055.29) 100,000 (4,883.88) 100,000 182.55 (4,701.33) 100,000 194.41 (4,506.92) 100,000 207.05 (4,299.87) 100,000 151.12 171.41 0.51 (4,079.36) 100,000 234.84 (3,844.52) 100,000 (3,594.42) 100,000 266.36 (3,328.05) 100,000 283.68 (3,044.38) 100,000

Explanation / Answer

Amount PV factor@6.5%(13%/2) Present value Interest 6000 11.0185 66111.04 Principal 100000 0.2838 28379.70 Issue price 94490.75 Discount = 10000-94490.75 = 5509.25

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