A $6,500 bond pays interest at 5% compounded semi-annually

Economics Apr 24, 2021

A $6,500 bond pays interest at 5% compounded semi-annually. The bond is redeemable in 1 year 6 months and is purchased to yield 3%.

1) Find the purchase price of the bond.

2) Calculate the premium or discount.

3) Construct the appropriate bond schedule, including the totals for Bond Interest, Interest on Book Value at Yield, and Premium Amortized or Discount Accumulated.

Expert Solution

1) Purchase price of bond = $6,689.29

2) Premium on bonds payable = $189.29

3) Please see the attachment:

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