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Notes issued at a discount , face value of notes 4,000,000 nominal rate 6%, effective rate...

Notes issued at a discount , face value of notes 4,000,000 nominal rate 6%, effective rate 8%, The note is issued on January 1, 2017 and mature in four years on January 1,2021. The interest is payable annually every December 31,

Since the interest is payable annually there are 4 interest periods . The relevant present value factors are:

PV of 1 at 8% for 4 periods .7350

PV of ordinary annuity of 1 at 8% for 4 periods 3.3121

Instructions:

(a) Compute for the present value of the note as issue date,

Present Value of Principal____

Present Value of annual interest payments___

Total Present Value of Notes____

(b) Compute for the discount

Face VAlue____

Market Value or Issue Price____

Discount on notes payable____

(c) Prepare the amortization Table

Date Interest Paid    Interest Expense Discount Amortization    Carrying Amount

January 1, 2017    _______________    ____________    _____________    _______________

December 31, 2017    ________________ _______________    ______________ ________________

December 31, 2018    __________________    _______________ _____________    __________________

December 31, 2019    ________________    _________________ _____________ _________________

December 31, 2020 _________________    _______________ ______________ _________________

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