Compute the amount of the six equal semi-annual payments

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Question :

On January 1, 2009, Comet Company purchased a building for $50,000, making a cash down payment of $8,000 and signing a note requiring six equal semi-annual payments for the balance. Payments are to be made on June 30 and December 31. The implicit interest rate is 8%, compounded semi-annually.

A. Compute the amount of the six equal semi-annual payments.

(Round answer to the nearest dollar amount)

B. How much interest expense will Comet Co. record on the note for the first year?

(Hint: Use the following amortization table to help you find the interest for each 6-month period.)

Date

Cash Payment

Interest Expense

Reduction

of Principal

 

Carrying Value

Issuance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference no: EM132316845

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