How much semi-annual interest expense will company report

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Reference no: EM132213050

Question: Financial Statement Impact

On July 1, 2014 Botwin Company issues $1,000,000, 10%, bonds payable. Click here and use the sliders provided for the market rate of interest and the number of semi-annual periods to answer the following questions.

1. If the bonds have a 10-year term and are issued when the market rate of interest is 12%:

a. How much semi-annual interest expense will the company report every six months? $

b. How much of the bond discount will the company amortize every six months? $

c. How much cash interest will the company pay to bondholders every six months? $

d. If the market rate of interest remains constant, and the number of periods decreases, the semi-annual discount amortization will increase .

2. If the bonds have a 5-year term and are issued when the market rate of interest is 14%:

a. How much semi-annual interest expense will the company report every six months? $

b. How much of the bond discount will the company amortize every six months? $

c. How much cash interest will the company pay to bondholders every six months? $

d. If the number of periods remains constant, and the market rate of interest increases, the semi-annual interest expense will increase.

Reference no: EM132213050

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