A company issued 10-year, 9% bonds with a par value of $500,000 when the market rate was 10%. How do I calculate the first semi-annual interest payment and the amortization of any bond discount or premium?© BrainMass Inc. brainmass.com June 4, 2020, 12:31 am ad1c9bdddf
First calculate the issue price of the bonds. The issue price is the present value of interest and principal discounted at the market rate of 10%. The semi annual interest is 500,000 X 9%/2 = 22,500. Time period is 10 X 2 = 20 semi annual and the discounting ...
The solution explains how to calculate interest payments and premium amortization using both effective interest rate and straight line method