3 The Growing Company is expanding and they need some cash to help with their expansion. The company has decided to issue a bond with an eight year maturity. The bond was issued on January 1, 2020. The principal for the bond is $37,500,000 and the bond was issued at a discount. The bond pays interest semi annually Required A. You must create the following to complete the problem: Determine the stated interest rate Determine the market interest rate
3 The Growing Company is expanding and they need some cash to help with their expansion. The company has decided to issue a bond with an eight year maturity. The bond was issued on January 1, 2020. The principal for the bond is $37,500,000 and the bond was issued at a discount. The bond pays interest semi annually Required A. You must create the following to complete the problem: Determine the stated interest rate Determine the market interest rate
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 11P
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Hello, I need formulas explaining the answers, thank you.
Transcribed Image Text:3 The Growing Company is expanding and they need some cash to help
with their expansion. The company has decided to issue a bond
with an eight year maturity. The bond was issued on January 1, 2020.
The principal for the bond is $37,500,000 and the bond was issued at a discount.
The bond pays interest semi annually
Required
А.
You must create the following to complete the problem:
Determine the stated interest rate
Determine the market interest rate
В
Calculate the annuity for the bond and the number of periods
Using Excel and showing your work, calculate the Present Value
for the bond.
D.
Prepare the journal entry for January 1, 2020 --- show your work
Е.
Prepare the journal entry for the interest/annuity payment
F
Prepare the amortization journal entry for the premium
G
Explain why interest expense dollar amount is different than cash the dollar
amount if you combine transaction E and F
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