On January 1, 2018, Tennessee Harvester Corporation issueddebenture bonds that pay interest semiannually on June 30 andDecember 31. Portions of the bond amortization schedule appearbelow:
| Payment | | Cash
Payment | | Effective
Interest | | Increasein
Balance | | Outstanding
Balance | |
| | | | | | | | 5,774,920 | |
| 1 | | 216,000 | | 230,997 | | 14,997 | | 5,789,917 | |
| 2 | | 216,000 | | 231,597 | | 15,597 | | 5,805,514 | |
| 3 | | 216,000 | | 232,221 | | 16,221 | | 5,821,735 | |
| 4 | | 216,000 | | 232,869 | | 16,869 | | 5,838,604 | |
| 5 | | 216,000 | | 233,544 | | 17,544 | | 5,856,148 | |
| 6 | | 216,000 | | 234,246 | | 18,246 | | 5,874,394 | |
| ~ | | ~ | | ~ | | ~ | | ~ | |
| ~ | | ~ | | ~ | | ~ | | ~ | |
| ~ | | ~ | | ~ | | ~ | | ~ | |
| 38 | | 216,000 | | 280,008 | | 64,008 | | 7,064,202 | |
| 39 | | 216,000 | | 282,568 | | 66,568 | | 7,130,770 | |
| 40 | | 216,000 | | 285,230 | | 69,230 | | 7,200,000 | |
|
Required:
1. What is the face amount of the bonds?
2. What is the initial selling price of thebonds?
3. What is the term to maturity in years?
4. Interest is determined by what approach?
5. What is the stated annual interest rate?
6. What is the effective annual interestrate?
7. What is the total cash interest paid over theterm to maturity?
8. What is the total effective interest expenserecorded over the term to maturity?
