How do interest expense and the carrying value of the note change over time for an installment note with fixed monthly loan payments?
For installment note with fixed monthly payments, interest expense is declining while carrying value is increasing over time.
Coney Island Entertainment issues $1,300,000 of 7% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: 1. The market interest rate is 7% and the bonds issue at face amount. 2. The market interest rate is 8% and the bonds issue at a discount. 3. The market interest rate is 6% and the bonds issue at a premium.