Question 3 (20 marks) On January 1, 2016, Feng, issued $1,000,000 face value, 5-year bonds...
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Question 3 (20 marks) On January 1, 2016, Feng, issued $1,000,000 face value, 5-year bonds with a stated rate of 5% at an etfective rate of 4% which brought in $1,044.913 Interest is paid semi-annually on July 1 and December 31. Feng uses the effective interest method of amortization Prepare the amortization table for the first 3 payment periods in the table below: Amortization Table Semi An Interest Interest Premium Premium Carrying Interest Date Payment Expense Amortization Balance Amount Amount Jan 1, 2016 July 1, 2016 Dec 31, 2016 July 1, 2017 Describe the two interest rates included in setting the price of a bond. 1
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