In this simulation, you will be asked various questions concerning the application of time value of money concepts to accounting problems. Prepare responses to all parts.

Your company is considering the issuance of bonds in the amount of $100,000. The bonds mature in 5 years and have an annual coupon rate of interest of 10%. Market interest rates have been fluctuating in recent weeks, and the treasurer of your company would like to know the amount of proceeds that can be expected from issuance of the bonds.

(a) Use a financial calculator to determine the amount of proceeds that will be received when the bonds are issued, assuming market interest rates for similar bonds are:
1. 12%
2. 8%

(b) Use a computer spreadsheet to prepare an amortization schedule for the bonds, assuming the bonds are issued when market interest rates are 12%.