5.11 The Interest Method: Solution
Solution
PV (Price) = 350,000 (8.9826) + 10,000,000 (0.8203) = $11,346,910
| Year | Coupon | Initial Expense | Amortization | Balance |
| 0 | $11,346,910 | |||
| 1 | $350,000 | $226,938 | ($123,062) | $11,223,848 |
| 2 | $350,000 | $224,477 | ($125,523) | $11,098,325 |
| 3 | $350,000 | $221,967 | ($128,033) | $10,970,292 |
| 4 | $350,000 | $219,406 | ($130,594) | $10,839,698 |
| 5 | $350,000 | $216,794 | ($133,206) | $10,706,492 |
| 6 | $350,000 | $214,130 | ($135,870) | $10,570,622 |
| 7 | $350,000 | $211,412 | ($138,588) | $10,432,034 |
| 8 | $350,000 | $208,641 | ($141,359) | $10,290,675 |
| 9 | $350,000 | $205,814 | ($144,186) | $10,146,489 |
| 10 | $350,000 | $202,930 | ($147,070) | $10,000,000 |
| Total | $3,500,000 | $2,152,509 | ($1,347,491) |
*This solution table has been provided by Yirmy Ertel, Class of 2021, Touro University, The Lander College for Men.
