9) The Federal Motors Company has a $1,000 par value bond outstanding that pays 8(1)/(2) percent annual interest.The current yield to maturity on such bonds in the market is 10 percent. Compute the price of the bonds for thesematurity dates: a) 25 years. b) 10 years. must be written out and not solved in excel

The price of a bond represents a sum of expected future cash flows from the bond discounted at its…

Answered: 9) The Federal Motors Company has a…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 18MC: OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000....

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OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. A. more than 6% B. less than 6% C. equal to 6% D. cannot be determined from the information given.
The Victoria Telephone Company has a $1,000 par value bond outstanding that pays 18 percent interest with annual payments. The current yield to maturity on such bonds in the market is 19 percent. Use Appendix B and Appendix D. Compute the price of the bonds for these maturity dates: (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. 25 Year b. 18 Year c. 1 Year Price of the bond $948.05 $ 949.67 $991.60 0 0 0
Colson Inc. issues 10-year bonds with a maturity value of $300,000. If the bonds are issued at a discount, this indicates that: Question 15 options: the contractual interest rate exceeds the market interest rate. the market interest rate exceeds the contractual interest rate. the contractual interest rate and the market interest rate are the same. no relationship exists between the two rates.
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Applied Software has a $1,000 par value bond outstanding that pays 13 percent interest with annual payments. The current yield to maturity on such bonds in the market is 11 percent. Use Appendix B and Appendix D. Compute the price of the bonds for these maturity dates: (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. 25 years b. 19 years c. 5 years Price of the bond $ $ $
(Please use Excel) Company A's bonds pay interest annually at $80, with a par/par value of $1,000. The bonds mature in 20 years. The market required yield to maturity on a comparable risk-bond is 8.5 percent.a) Calculate the value of the bond.b) What is the value of the bond when the market required yield to maturity on a comparable risk bond (i) increases to 12 percent or (ii) decreases to 7 percent?c) Interpret the findings in sections a and b.
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On July 1, Somers Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12 %. The bonds paid interest semi-annually. A. Assuming the bonds sold at 59.55, what was the selling price of the bonds? B. Explain why the cash received from selling this bond is different from the $200,000 face value of the bond. Investors can earn a higher rate ✓ in other similar bonds so the bond sells at a discount
Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, which is also the amount of principal to be paid at maturity. The bonds are currently selling for $520. They have 10 years to maturity, Annual interest is 12 percent ($120), paid semiannually Compute the yield to maturity. (Do not round intermediate calculation. Use a Financial calculator to arrive at the answers. Round the final answer to 2 decimal places.) Yield to maturity %
The Lone Star Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 18 years. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Compute the current price of the bonds if the present yield to maturity is. Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual. a. 7 percent b. 8 percent c. 13 percent Bond Price I
Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 19 percent annual interest. The current yield to maturity on such bonds in the market is 11 percent. Calculate your final answer using the formula and financial calculator methods. Compute the price of the bonds for these maturity dates: (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.) Bond Price a) 25 years b) 19 years c) 5 years

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