On January 1, 2019, Drennen Inc. issued $5 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2028. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.) Can you please share the calculations on how 350,000 in interest was obtained for the 20 periods in question, thank you
On January 1, 2019, Drennen Inc. issued $5 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2028. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.) Can you please share the calculations on how 350,000 in interest was obtained for the 20 periods in question, thank you
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 4EB: Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market...
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On January 1, 2019, Drennen Inc. issued $5 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2028. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.)
Can you please share the calculations on how 350,000 in interest was obtained for the 20 periods in question, thank you.
Expert Solution
Step 1
Given:
Face value= $5,000,000
i (Stated interest rate) = 14%
n (Time period)= 10 x 2 = 20
Market interest rate = 12%
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