5.10 The Interest Method: Practice Problem
Exercises
Using the Interest Method and the template below, complete the amortization table for the following bond which a corporation is issuing now. The solution follows.
| Face Value: | $10 Million |
| Coupon: | 7% |
| Yield-to-Maturity: | 4% |
| Term-to-Maturity | 5 Years |
| Payment Frequency: | Semi-Annual |
| Year | Coupon | Interest Expense | Amortization | Balance |
|---|---|---|---|---|
| 0 | ||||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 8 | ||||
| 9 | ||||
| 10 | $10,000,000 | |||
| Total |
