Evaluate the issue price of the bonds

Assignment Help Financial Accounting

Reference no: EM135616

On 1^st January, 2011, Piper Co. issued 10-year bonds with a face value of $1,000,000 and a stated interest rate of 10 percent, payable semi-annually on June 30 and 31^st December. The bonds were sold to yield 12%. Table values are:

Current value of 1 for 10 periods at 10% .386

Current value of 1 for 10 periods at 12% .322

Current resent value of 1 for 20 periods at 5% .377

Current value of 1 for 20 periods at 6% .312

Current value of annuity for 10 periods at 10% 6.145

Current value of annuity for 10 periods at 12% 5.650

Current resent value of annuity for 20 periods at 5% 12.462

Current resent value of annuity for 20 periods at 6% 11.470

Instructions:

- Evaluate the issue price of the bonds.

- Without prejudice to your solution in Part (a), suppose that the issue price was $884,000. Prepare the amortization table for 2011; consider that amortization is recorded on interest payment dates.

Reference no: EM135616

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