Question

Pharmaceutical Dispensary borrowed $ 630 comma 000 on January​ 2, 2018​, by issuing a 15 % serial bond payable that must be paid in three equal annual installments plus interest for the year. The first payment of principal and interest comes due January​ 2, 2019. Complete the missing information. Assume bonds are issued at face value

Answer 1

$273 ,000 being the equal installments for all the three years

Step-by-step explanation:

I year interest = $ 630,000 ×15÷100 = 94,500

`I year interest = $ 630,000 ×15÷100 = 94,500`

II year interest = $420,000×15÷100 = 63,000

`II year interest = $420,000×15÷100 = 63,000`

III year interest = $210 ,000×15÷100 = 31,500

`III year interest = $210 ,000×15÷100 = 31,500`

Total interest = 94,500+63,000+31,500 = 189.000

`Total interest = 94,500+63,000+31,500 = 189.000`

Installments payment with interest for each year is=

(630,000 + 189,000 = 819,000÷ 3 = 273,000)

`(630,000 + 189,000 = 819,000÷ 3 = 273,000)`

= $273 ,000 being the equal installments for all the three years