Ask Question
14 June, 00:55

Moonlight Company sells $ 300 comma 000 of 9​ %, 15​ -year bonds for 67.0453 on April​ 1, 2018. The market rate of interest on that day is 14.5​ %. Interest is paid each year on April 1. The issue price of the bond is $ 201 comma 136. Moonlight Company uses the​ straight-line amortization method. The amount of interest expense for each year will be

+3
Answers (1)
  1. 14 June, 01:08
    0
    Interest expense for the year: 33,590.33

    Explanation:

    face value $ 300,000

    rate 9%

    time 15 years

    issued at $ 201, 136

    discount: $ 98, 864

    amortization per year under straight-line: the discount is equally distributed for each period

    98,864 / 15 = 6,590.33

    interest expense per year:

    face value x rate + amortization:

    300,000 x 0.09 + 6,590.33 = 33,590.33
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Moonlight Company sells $ 300 comma 000 of 9​ %, 15​ -year bonds for 67.0453 on April​ 1, 2018. The market rate ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers