PEREYRA, INA PAULYNNE PALIS

Given:

Face amount of bonds 5,000,000

Nominal rate 12%
Effective rate 16%
The bonds are issued on January 1, 2021 and mature in 5 years.
The interest is payable semiannually on June 30 and December 31.

PV of Principal = 5,000,000 x (1+8%)^-10 = 2,315,967.44

PV of Interest = 300,000 x 1- (1+8%)^-10 / 8% = 2,013,024.42
Bonds PV = 2,315,967.44 + 2,013,024.42 = 4,328,991.86

1. Calculate the issue price of the bond

4,328,991.86
2. Calculate the carrying amount of the bond on December 31, 2021
4,425,336.11
3. Calculate the interest expense on 2022
712,375.93
4. Calculate the carrying amount of the bond on June 30, 2022
4,479,363.00