Score Ltd is authorized to issue $2,000,000 of 3%, 10-year bonds payable. On Dec

Question

Score Ltd is authorized to issue $2,000,000 of 3%, 10-year bonds payable. On December 31, 2016, when the market interest rate is 7%, te company issues S1 00000 of the bonds. semiannual interest dates are June 30 and December 31. Requirements 1. Use the PV function in Excer to calculate the issue price of the bonds. 2. Prepare a bond amortization table for the first year of the bonds. 3. 2017 an oa ment on P embe31 207 Record issuance of bonds payable on December 31, 2016; the first se annual interest payment on June Requirement 1. Use the PV function in Excel to calculate the issue price of the bonds. (Round your answer to the nearest whole dollar.) The issue price of the bonds is $ the secon

Explanation / Answer

FV = $1,600,000

PMT = 1,600,000*0.03/2 = 24,000

N =10*2 = 20

r = 3.5%

PV = (24000/0.035)*(1 - 1/1.035^20) + 1,600,000/1.035^20 = 1,145,203.09

Issue price of bond = $1,145,203.09

PV(3.5%, 20, 24000, 1600000) returns -1,145,203.09

A B = A*3.5% C = 24,000 D = B - C E = A + D Date # Beg Balance Interest Coupon Amortized amt End Balance 31-Dec-2016 1 1,145,203.09 40,082.11 24,000.00 16,082.11 1,161,285.20 30-Jun-2017 2 1,161,285.20 40,644.98 24,000.00 16,644.98 1,177,930.18 31-Dec-2017 3 1,177,930.18 41,227.56 24,000.00 17,227.56 1,195,157.74 4 1,195,157.74 41,830.52 24,000.00 17,830.52 1,212,988.26 5 1,212,988.26 42,454.59 24,000.00 18,454.59 1,231,442.85 6 1,231,442.85 43,100.50 24,000.00 19,100.50 1,250,543.35 7 1,250,543.35 43,769.02 24,000.00 19,769.02 1,270,312.37 8 1,270,312.37 44,460.93 24,000.00 20,460.93 1,290,773.30 9 1,290,773.30 45,177.07 24,000.00 21,177.07 1,311,950.37 10 1,311,950.37 45,918.26 24,000.00 21,918.26 1,333,868.63 11 1,333,868.63 46,685.40 24,000.00 22,685.40 1,356,554.03 12 1,356,554.03 47,479.39 24,000.00 23,479.39 1,380,033.42 13 1,380,033.42 48,301.17 24,000.00 24,301.17 1,404,334.59 14 1,404,334.59 49,151.71 24,000.00 25,151.71 1,429,486.30 15 1,429,486.30 50,032.02 24,000.00 26,032.02 1,455,518.32 16 1,455,518.32 50,943.14 24,000.00 26,943.14 1,482,461.47 17 1,482,461.47 51,886.15 24,000.00 27,886.15 1,510,347.62 18 1,510,347.62 52,862.17 24,000.00 28,862.17 1,539,209.78 19 1,539,209.78 53,872.34 24,000.00 29,872.34 1,569,082.13 20 1,569,082.13 54,917.87 24,000.00 30,917.87 1,600,000.00

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