3.3 Kapoor Bhd issued 4 percent debentures with a nominal value of RM40,000,000 on 1 January x1. The debentures were issued at a discount of 2.5 percent and the issue cost incurred was RM1,000,000. The loan notes will be repayable at a premium of 10.25 percent at the end of the fifth year. The effective interest rate is 7 percent. Interests are to be paid on 31 December. Assume: The company has classified the debentures at amortised cost. D. The company has classified the debentures at fair value through profit or loss. Market value of the debentures in years x1 to x5 is as follows: a.

3.3 Kapoor Bhd issued 4 percent debentures with a nominal value of RM40,000,000 on 1 January x1. The debentures were issued at a discount of 2.5 percent and the issue cost incurred was RM1,000,000. The loan notes will be repayable at a premium of 10.25 percent at the end of the fifth year. The effective interest rate is 7 percent. Interests are to be paid on 31 December. Assume: The company has classified the debentures at amortised cost. D. The company has classified the debentures at fair value through profit or loss. Market value of the debentures in years x1 to x5 is as follows: a.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Tano Company issues bonds with a par value of $180,000 on January 1 of the current year. The bonds' annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $170,864. Par value Contract rate Term Market rate Proceeds Payments per year Required: 1. What is the amount of the discount on these bonds at issuance? Discount Total repaid Less amount borrowed Total bond interest expense $9,136 2. How much total bond interest expense will be recognized over the life of these bonds? Total Bond Interest Expense Over Life of Bonds: Amount repaid: GUEUNEO (0) 2 payments of Par value at maturity (2) (3) (4) (5) (6) Amount of semi-annual discount amortization $180,000 896 3. Prepare a straight-line amortization table for these bonds. Semiannual Period-End 3 years 10% $170,864 2 1/1/2024 6/30/2024 12/31/2024 6/30/2025 12/31/2025 6/30/2026 12/31/2026 $5,400…
2. A 10-year, P20,000 bond was issued at a nominal interest rate of 8% with semiannual compounding. Just after the fourth interest payment, the bond will be sold. Assume that an effective interest rate of 10 % % will apply, and calculate the price of the bond.
On January 1, a company issues bonds dated January 1 with a par value of $230,000. The bonds mature in 3 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8%. Using the present value factors below, the issue (selling) price of the bonds is: number of periods interest rate (n)= 3 636 Multiple Choice (i)= 7.0% 3.5% 8.0% 4.0% $236,032. $223,968. $230,000. $42,199. $181,769. Present Value of an Annuity (series of payments) 2.6243 5.3286 2.5771 5.2421 Present value of 1 (single sum) 0.8163 0.8135 0.7938 0.7903
Ellis Company issues 8.0%, five-year bonds dated January 1, 2021, with a $530,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $540,871. The annual market rate is 7.5% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments. Please need answer for all with working please answer do not waste time or question by holding attempt if you can otherwise skip
Enviro Company issues 8%, 10-year bonds with a par value of $290,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1⁄2. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What is the amount of bond interest expense recorded on the first interest payment date?
On January 1, Shanghai Fashions issued $325,000 of 6%, 3-year bonds when the market rate of interest was 10%. The bonds pay interest semiannually on June 30 and December 31. A. How much are the proceeds that Shanghai Fashions Company will receive on the issue date of the bonds? B. Prepare an amortization table for the bond issue. C. If the bonds are retired at the end of Year 2 at 104.5% of the maturity value, how much gain or loss on retirement will be reported?
On January 1, a company issues bonds dated January 1 with a par value of $260,000. The bonds mature in 3 years. The contract rate 59%, and interest is paid semiannually on June 30 and December 31. The market rate is 10%. Using the present value factors below, the issue (selling) price of the bonds is: number of periods interest rate (n)= 3 6 3 6 Multiple Choice (i)= 9.0% 4.5% 10.0% 5.0% $266,602. $59,386. Present Value of an Annuity (series of payments) 2.5313 5.1579 2.4869 5.0757 Present value of 1 (single sum) 0.7722 0.7679 0.7513 0.7462
Marwick Corporation issues 10%, 5 year bonds with a par value of $1,050,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%. What is the bond's issue (selling) price, assuming the following Present Value factors: n= 5 10 5 10 i= 10% 5% 8% 4% Multiple Choice O Present Value of an Annuity 3.7908 7.7217 3.9927 8.1109 C $624,178 $1,475,822 $1.135.202 Present value of $1 0.6209 0.6139 0.6806 0.6756
Garcia Company issues 10%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 %. The effective interest method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What amount of bond interest expense is recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What amount of bond interest expense is recorded on the first interest payment date? Bond interest expense
On January 1, 2024, Christmas Anytime issues $850,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Assume that the market interest rate is 7% and the bonds issue at a discount.2a. Calculate the issue price of a bond.2b. Complete the first three rows of an amortization schedule. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $335,819. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $10,831.90; debit Discount on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit Interest Expense $13,668.10, credit Discount on Bonds Payable $1,418.10, credit Cash $12,250.00 Debit Interest Expense $12,250.00, credit Cash $12.250.00 Debit interest Expense $13,668.10; credit Premium on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit interest Payable $12.250.00; credit Cash $12.250.00
7 Quatro Company issues bonds dated January 1, 2021, with a par value of $700,000. The bonds' annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $717,237. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare a straight-line amortization table for these bonds. Complete this question by entering your answers in the tabs below. Required 1 Semiannual Interest Period- End 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 06/30/2023 12/31/2023 Required 2 Required 3 Prepare a straight-line amortization table for these bonds. Note: Round your intermediate calculations to the nearest dollar amount. Unamortized Premium X Answer is complete but not entirely correct. $ 2,873 2,873 X 2,873 x 2,873 x 2,873 x 14,364 0 $ Carrying…

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