9. On January 1 of Year 1, Lily Company issued a $100,000, 14%, 10-year bond. Interest is paid semi-annually each June 30 and December 31, so the first coupon payment was made on June 30 of Year 1 and the second coupon payment was made on December 31 of Year 1. On the day the bond was issued, the market interest rate on bonds with the same degree of riskiness was 8% compounded semi-annually. What is the issuance price of these bonds? $168,218 O $68,218 O $140,771 O $140,260 O $159,378 O $106,000
9. On January 1 of Year 1, Lily Company issued a $100,000, 14%, 10-year bond. Interest is paid semi-annually each June 30 and December 31, so the first coupon payment was made on June 30 of Year 1 and the second coupon payment was made on December 31 of Year 1. On the day the bond was issued, the market interest rate on bonds with the same degree of riskiness was 8% compounded semi-annually. What is the issuance price of these bonds? $168,218 O $68,218 O $140,771 O $140,260 O $159,378 O $106,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Help with 9,10 please

Transcribed Image Text:9
On January 1 of Year 1, Lily Company issued a $100,000, 14%, 10-year bond. Interest is paid
semi-annually each June 30 and December 31, so the first coupon payment was made on June 30
of Year 1 and the second coupon payment was made on December 31 of Year 1. On the day the
bond was issued, the market interest rate on bonds with the same degree of riskiness was 8%
compounded semi-annually. What is the issuance price of these bonds?
O $168,218
O $68,218
O $140,771
O $140,260
O $159,378
O $106,000
10
Tarazi Company issued bonds with a coupon rate of 10% and a face amount of $200,000.
The bonds mature in 15 years. The market interest rate for bonds with the same degree of
riskiness is 8% compounded annually. These bonds were issued on January 1 of Year 1 at a
price of $234,238. Coupon payments are made annually on December 31, so the first
coupon payment was made on December 31 of Year 1. As of December 31 of Year 2, the
carrying value of the bonds is $231,615. These bonds were retired on December 31 of Year 2,
just a few minutes after the second coupon payment was made. The total amount paid to
retire these bonds was $250,000. How much gain or loss is recorded when these bonds are
retired?
O Loss of $18,638
O Loss of $18,385
O Loss of $231,615
O Gain of $18,638
O Gain of $18,385
O Gain of $200,000
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