Interest $80,000 ($2,000,000 x 4%) Annuity over 12 payments at 3% =9.9540 $80,000 x 9.9540 796,320 Principal $2,000,000 PV of $1 in 12 periods at 3% =.7014 $2,000,000 x .7014 1,402,800 Total PV 2,199,120 (b) Construct a schedule in the format indicated below. Show the periodic interest expense over the entire life of the debentures, using the effective interest method. (6 marks) Period Date Opening Liability Balance Interest Expense (3%) Cash Payment Reduction in liability Closing Liability Balance…
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