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A debt service bond premium amortization method effective interest rate discount (1)

Real interest rate discount bond premium amortization method, that is, each beginning with the effective interest rate multiplied by the book value of bond investments (not including accrued interest,[link widoczny dla zalogowanych], the same below), calculate and determine the interest income each period, the phases of the interest income and interest receivable as the difference between the amortization of the premium discount. To the bond expires,[link widoczny dla zalogowanych], premium amortization of discount all finished, the book value of bonds is exactly equal to its par value. With the book value of the bond discount amortization of bond premium is reduced or increased, so also will the interest income is calculated by reducing or increasing the amount of the amortization period is increased or decreased. Expiration of a debt service for bonds,[link widoczny dla zalogowanych], each to determine the actual interest rates and interest receivable,[link widoczny dla zalogowanych], is to calculate the amount of premium discount amortization key. One, a debt service to determine the real interest rate bonds the current effective interest rate of bonds is not simply equated with market interest rates or bank lending rates. Therefore, bank lending rates and bond coupon rate calculated based on a discount bond premium is difficult with the reality. For this reason, I believe that the issue of bonds involved in the premium discount real interest rates, can only be a hidden among the principal and interest on the bonds, the concept of interest rates, as investors and issuers can accept the existence of interest rate, based on the issuer's premium rate discount bonds, and investors are based on the cost of investment securities and future returns can be achieved, which converted the implied rate of return on investment, return on this investment is the real interest rate. One-time debt securities, the information generally does not count compound interest, but investors must be confirmed by annual installments or loss, but also consider the time value of money. In calculating the effective interest rate, you must calculate the compound interest, calculated as follows: set: real interest rate bonds (compound interest rate) is r,[link widoczny dla zalogowanych], a period of n years, the expiration of a debt, then: = bond maturity and the aggregate nominal amount of principal and interest bonds total face value of ten × coupon rate × n Order: The total investment cost of debt × (1 + r) = bond principal and interest due and easy to draw: Example: A business January 30, 1999 to 84,000 yuan purchaser has business January 1, 1999 issue of the 5-year bonds carry a coupon interest rate of 12%, the total face value of bonds 80,000 yuan, the bonds after the expiration of a debt service, excluding compounding. Assume that a business did not occur on the time of purchase taxes. A corporate purchaser of the real interest rate debt is calculated as follows; principal and interest at maturity, and = 80000 +80000 × 12% × 5 = 128000 real interest rate is determined, the face value of bonds and interest income available amortization of premium and not the actual interest rate is calculated by multiplying. Must be noted that previously said the total cost of investment, including the purchase of bonds should occur during the relevant taxes, but because these taxes do not constitute a premium bond discount, premium discount amortization in the study of problems, may not consider this factor.