Powertap utilities is planning to issue bonds with a face value of 1000000 and a coupon rate of 10%. The bonds mature in 10 years and pay interest semi-annually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Powertap uses the effective-interedt amortization method. Assume an annual market rate of interest of 12%.
1. What was the issue price on January 1 of this year?
2. What amount of interest expense should be recorded on June 30 and December 31 of this year?
3) What amount of cash should be paid to investors June 30 and December 31 of this year?
4) What is the book value of the bonds on June 30 and December 31 of this year?
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Powertap utilities is planning to issue bonds with a face value of 1000000 and a coupon rate of 10%....
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