County Bank has $300,000 of 7% debenture bonds outstanding. The bonds were issued at 103 in 2016
Question:
County Bank has $300,000 of 7% debenture bonds outstanding. The bonds were issued at 103 in 2016 and mature in 2036. The bonds have annual interest payments.
Requirements
1. How much cash did County Bank receive when it issued these bonds?
2. How much cash in total will County Bank pay the bondholders through the maturity date of the bonds?
3. Calculate me difference between your answers to requirements 1 and 2. This difference represents County Bank's total interest expense over the life of the bonds.
4. Compute County Bank's annual interest expense by the straight-line amortization method. Multiply this amount by 20. Your 20-year total should be the same as your answer to requirement 3.
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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1 Cash received 300000 103 2 Principal 3 4 Interest 300000x 07 20 Total cash paid Tot...View the full answer
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Related Book For 
Financial Accounting
ISBN: 978-0134127620
11th edition
Authors: Walter Harrison, Charles Horngren, William Thomas, Wendy Tietz
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