Answer:
attached table
Explanation:
We use goal seek of excel to determinate the market rate:
Which is the rate that discounting the coupon payment and maturity matches the 5,421,236 we receive for the bond:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 200,000.000
time 10
rate 0.030117724
[tex]200000 \times \frac{1-(1+0.0301177235440986)^{-10} }{0.0301177235440986} = PV\\[/tex]
PV $1,705,016.0533
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 5,000,000.00
time 10.00
rate 0.030117724
[tex]\frac{5000000}{(1 + 0.0301177235440986)^{10} } = PV[/tex]
PV 3,716,219.95
PV c $1,705,016.0533
PV m $3,716,219.9467
Total $5,421,236.0000
Now, we determiante the schedule by doing as follow:
carrying value x market rate = interest expense
cash outlay per period: face value x coupon rate
the amortization will be the difference
after each payment we adjust the carrying value by subtracting the amortization
