BUS 320 Lecture Notes - Lecture 8: Promissory Note, Amortization Schedule, Jansky

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 320
• Professor: Dennis Chung

Document Summary

Monarch industrial limited (mil) has a december 31 year end, and the company"s common shares are actively traded on the tsx. On july 1, 20x1, mil acquired as a long-term investment ,000 of western corporation bonds with a 9% stated coupon rate. The bonds were purchased by mil to yield 6%, a rate equivalent to the market interest rate for investments with comparable risk level. The western corporation bonds mature on june 30, 20x5, and interest on the bonds is payable semi-annually every six months on june 30 and december 31. Required: (i) determine the present value of the bonds purchased by mil on july 1, 20x1. Use your financial calculator and show the values of the input variables that you use in deriving your answer. Round all dollar amounts to the nearest dollar. (ii) prepare an effective-interest amortization schedule for mil"s july 1, 20x1 investment in the. Round all dollar amounts to the nearest dollar.