Business, 25.02.2020 20:21 jmalfa

On February 1, 2018, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of $80 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $80,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVD of $1 an PVAD of $1) (Use appropriate factor(s) from the tables provided.)
(1) Determine the price of the bonds issued on February 1, 2018.
(2) Prepare amortization schedules that indicate Cromley’s effective interest expense for each interest period during the term to maturity.

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On February 1, 2018, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of...

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