Forms of Borrowing LiabilityTables

Forms of Borrowing LiabilityTables - 1. Five-year 6% Zero...

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1. Five-year 6% Zero Coupon Note; maturity amount $100,000 and proceeds =$74 Period Cash Flow Carrying Amount at borrowing 74,725.82 end year 1 4,483.55 4,483.55 79,209.37 end year 2 4,752.56 4,752.56 83,961.93 end year 3 5,037.72 5,037.72 88,999.65 end year 4 5,339.98 5,339.98 94,339.63 end year 5 5,660.38 100,000 (94,339.62) 0.00 NPV = $74,725.82 2. Mortgage note with $100,000 proceeds and 6% annual interest rate. Payments = $100,000/(Pva, n=5, i=6%) = $100,000/4.21236 = $23,739.64 Period Cash Flow Carrying Amount at borrowing 100,000.00 end year 1 6,000.00 23,739.64 (17,739.64) 82,260.36 end year 2 4,935.62 23,739.64 (18,804.02) 63,456.34 end year 3 3,807.38 23,739.64 (19,932.26) 43,524.08 end year 4 2,611.44 23,739.64 (21,128.20) 22,395.89 end year 5 1,343.75 23,739.64 (22,395.89) 0.00 PMT = ($23,739.64) 3. 5-year bond with principal of $100,000; face and market interest rates of 3% per Period Cash Flow Carrying Amount at borrowing 100,000.00 6 months 3,000.00 3,000.00 0.00 100,000.00
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