Cash budget enquiry

[Ambertan]

Hi,

I am to prepare a cash budget from June to Sep 2015.

The question states: the company has made arrangements for the company to issue 10% debentures to the value of $130,000 to be repaid in the year 2023. Interest on debentures will be paid by ten-six monthly installments, in arrears. $130,000 will be credited to the company's bank account on 1 Aug 2018.

What does "ten-six monthly installments" mean?

 

[Steve-LevelUp]

What to you think it means? would would a 6 month installment mean? What do you think 10 of them would mean.

Map out the calendar of payments as this might help to clarify things in your mind.

 

[Ambertan]

Does that mean 10% of $130,000, equals to $13,000 is paid per semi-annual across a period of 5 years?

 

[Steve-LevelUp]

the 10% figure is an annual figure, so the interest payment would be half of that, 5%.