1. Johnny is saving for a trip to Europe. He plans to put aside $2,000 at the beginning of each of 5 years. He will then increase his contributions to $3,000 to be made at the beginning of years 6 - 10. How much will Johnny have saved by the end of the 10th year, assuming the account he is investing in will earn a 5% rate?
2. Sandy Dunes Inc. is issuing $500,000 of 20 year bonds with a coupon rate of 8%. The bonds pay interest every January 1 and July 1. The market would like to earn a return of 6%.
(A) Calculate the bond issue price and record the journal entry for the bond issuance
(B) How much total interest expense will be recorded the first year that the bond is outstanding?