The below information will be used for the next two questions. A Company issued a bond payable with detachable warrants on January 1,201 as follows. All bonds are interest due annually with the bond due at maturity. 1 warrant =1 share of $1 par value stock What is interest expense in 20X1? Numeric Response Hint hint \#0 Key: We have to take the total issuance and allocate it between the bond and the warrant, based on their individual values. The portion allocated to the bond is the starting Carrying Value of the bond. 'Value of warrant = number of bonds issued times warrants per bond times value per warrant Bond issue price or the proceeds from the sale of these bonds and warraits (given) This percentage is a percentage of the "Value" column that will be used to allocate the the "Proceeds". 390,000/430,000 and 40,000/430,000. Allocate the 414,000 to the bond and the warrant. Once you determine the allocation of the proceeds to the value of the bond. That is your present value of the bond. Establish an amortization schedule based on the following: - PMT =(400,0004.7% coupon rate ) - N=10 - 1/Y=??? - PV= computed above - FV=(400,000) Interest expense in year 1 can be computed using the amortization schedule with the market rate of interest