Assume that the following information is relevant for one of the bond issues of Steve Company:
Face value $600,000
Bond term 20 years
Stated interest rate 8% (paid semiannually)
Market interest rate 10%
Issue dateJanuary 1, 2009
Interest payment datesJune 30 and December 31
Present Value Factors:4%5%8%10%
Present value of 1 for 20 periods0.4560.3770.2150.149
Present value of 1 for 40 periods0.2080.1420.0460.022
Present value of annuity for 20 periods13.59012.4629.8188.514
Present value of annuity for 40 periods19.79317.15911.9259.779
On January 1, 2009, the amount the bonds should sell for is
$___________
The total amount of bond interest to be paid in cash over the life of the bonds is:
$_____________.
The amount of interest expense for 2009 using the effective interest method of amortization is
$__________. (show exact amount including cents)
(round to nearest cent)
(Use only the present value factors shown above to make calculations.)
The amount of bond interest paid in cash for 2009 is
$___________.
this entire topic is extremely fuzzy to me i have no idea how to find what percent to use, my book is extremely unclear.. HELP! 
Do you need all the answers? Figuring out what the bond paid during a calendar year is easy:
Stated interest rate 8%* 1 bond ($1,000 par)= $80, or $40 twice a year.
For $600,000 worth of bonds, it would be $600,000 * 8%= $48,000!
May 15th, 2009 at 4:19 am
Do you need all the answers? Figuring out what the bond paid during a calendar year is easy:
Stated interest rate 8%* 1 bond ($1,000 par)= $80, or $40 twice a year.
For $600,000 worth of bonds, it would be $600,000 * 8%= $48,000!
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