Opt_Prob_Solutions_chap_10_Solutions

# Opt_Prob_Solutions_chap_10_Solutions - Chapter 10 Optional...

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Chapter 10 Optional Problem Solutions P10–6. Req. 1 Computations: Interest: \$700,000 x 8% = \$ 56,000 Present value \$ 700,000 x 0.6209 = 434,630 \$ 56,000 x 3.7908 = 212,285 Issue Price \$646,915 Req. 2 2006 2007 Interest expense ...................................... \$66,617 * \$66,617 * *\$700,000 - \$646,915 = \$53,085 ÷ 5 years = \$10,617 + \$56,000 = \$66,617 Req. 3 2006 2007 Cash paid ................................................. \$56,000 \$56,000 Req. 4 2006 2007 Bonds payable ......................................... \$657,532* \$668,149** *\$646,915 + \$10,617 = \$657,532 **\$657,532+ \$10,617 = \$668,149

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P10–7. Req. 1 Computations: Interest: \$1,000,000 x 10% = \$ 100,000 Present value \$ 1,000,000 x 0.5674 = 567,400 \$ 100,000 x 3.6048 = 360,480 \$927,880 Req. 2 2006 2007 Interest expense ...................................... \$111,346* \$112,707** \$927,880 x 12% = \$111,346
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