Question

Write out a Bond Amortization Schedule for a $1200 par value bond if r =.04, P = 1000, i = 4.8% and n =6

I don't know how to do it since Fr = 1200*0.04 = 48 = I1 = 1000*0.048

Answer 1

Assuming the rates are on per annum basis.

Period	Interest payment	Interest Expense	Amortization of bond discount	Debit Balance in Bond discount	Credit balance	Book Value
0				$                        94.24	$ 1,000.00	$     905.76
1	$                 40.00	$                43.48	$                                      3.48	$                        50.76	$ 1,000.00	$     949.24
2	$                 40.00	$                45.56	$                                      5.56	$                          5.20	$ 1,000.00	$     994.80
3	$                 40.00	$                47.75	$                                      7.75	$                      -42.55	$ 1,000.00	$ 1,042.55
4	$                 40.00	$                50.04	$                                   10.04	$                      -92.59	$ 1,000.00	$ 1,092.59
5	$                 40.00	$                52.44	$                                   12.44	$                    -145.04	$ 1,000.00	$ 1,145.04
6	$                 40.00	$                54.96	$                                   14.96	$                    -200.00	$ 1,000.00	$ 1,200.00
	$               240.00	$              294.24	$                                   54.24