James River Enterprises issued a bond on January 1, 1996, with aface (maturity) value of $1,000 and a coupon rate of 8% per year.The bond paid interest semiannually, and matured in three years.Prepare an amortization table in the format shown below using theeffective interest method, under each of the followingcircumstances: a. The market rate on the date of issue was 8%. b.The market rate on the date of issue was 10%. c. The market rate onthe date of issue was 6%. Please answer (for each of the threeabove cases) what would be the price, which will be paid and whatwill be the gain (or loss) if any for James River Enterprises, fromthis transaction. a. The price for the bond repurchase is: , theresulting gain/loss is: b. The price for the bond repurchase is: ,the resulting gain/loss is: c. The price for the bond repurchaseis: , the resulting gain/loss is:
