On November 1, 2014, Yardley Inc. issued a $740,000, 5%, two-year bond. Interest is to be paid

Question:

On November 1, 2014, Yardley Inc. issued a $740,000, 5%, two-year bond. Interest is to be paid semi-annually each May 1 and November 1.

Required
a. Calculate the issue price of the bond assuming a market interest rate of 6% on the date of the bond issue.
b. Using the effective interest method, prepare an amortization schedule similar to Exhibit 15.10.