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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