Answer to Question #267890 in Math for Tonnie

Question

On Jan 1 2011, Meade group issued sh. 8m of 11% bonds, dated Jan 1. Interest is payable semi annually on June 30 and Dec 31. The bond matures in 4 years. The market yield for bonds of similar risk and maturity is 10%.

Required

i. Determine the price these bonds sold for to yield 10% market rate and record their issuance by the Meade group. [6 marks]

ii. Prepare an amortization schedule that determines interest at the effective rate and record statement on the first interest date, June 30th 2011.