A 10-year bond issue with a $100,000 par value, 8% annual contract rate, and interest payable semiannually means that the issuer must repay $100,000 at the end of 10 years and make 20 semiannual interest payments of $4,000 each. Group startsTrue or False True, False,

A 10-year bond issue with a $100,000 par value, 8% annual contract rate, and interest payable semiannually means that the issuer must repay $100,000 at the end of 10 years and make 20 semiannual interest payments of $4,000 each. Group startsTrue or False True, False,

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.3E: Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8%...

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Question

A 10-year bond issue with a $100,000 par value, 8% annual contract rate, and
interest payable semiannually means that the issuer must repay $100,000 at the
end of 10 years and make 20 semiannual interest payments of $4,000 each.
Group startsTrue or False
True, False,

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2. DEF Company will issue $8,000,000 in 10%, 10-year bonds when the market rate of interest is 7%. Interest is paid semiannually. Required: a. Will this interest structure result in a Premium for DEF company or a Discount? b. How much cash will be received from the issuance of the bond? c. How much will the semi-annual interest payment be on the bond?
Determine the market price of a $485,000, 10-year, 8% (pays interest semiannually) bond issue sold to yield an effective rate of 10%. What is the market price?
Can someone please explain this to me.
The following information applies to this question: Johnson Corporation plans to obtain financing with a $1,000,000 bond issue that has a term of 10 years. Payments wilI be made semi-annually. if the bond (payment) rate is stated at 7%, and the bonds call for semi-annual payments, what is the amount of those payments? O a. $350,000 O b. $70,000 OC. $35,000 d. $700,000
Need Solutions ASAP... A 10-year, $20,000 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 (1/4)% will apply, and calculate the price of the bond. (Answer: $17,832)
The market price of an $960000, ten-year, 12% (pays interest semiannually) bond issue sold to yield an effective rate of 10% is
A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A: $36,798 premium B: $10,097 discount C: $11,778 D:$35,117 discount
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.
A $3000, 7.5% bond (payable semi-annually) is redeemable at par in 2 years and 6 months. If the bond is purchased to yield 8.1% compounded semi-annually, determine the purchase price of the bond. Draw a timeline in your notes to help you practice!
bond contract rate =7% semi- anual bond -$10,000 bond market =6% semi annual bond life = 10 years 1) find the selling price of this bond 2) will it be sold at a discount or premium 3) do the journal entry for the issuance 4) calculate the discount/premium authorization per period (use the slightline method ) 5) do the entry for the payment of cash interest period 6) do the entry for the amortization of the discount /premium per period 7)find total interest expense per period 8) show the balance sheet presentation of the bond after two periods have elapsed
A $1,000 face value bond issued by the Purdue Company currently pays total annual interest of $80 per year and has a 15-year life. a-What is the present value, or worth, of this bond if investors are willing to accept a 10 percent annual rate of return on bonds of similar quality bond? b. How would your answer change is the bond makes semi-annual payments? c-How would your answer in (a) change if, one year from now, investors only required a 6 percent annual rate of return on bond investments similar in quality to the Purdue bond? d-Suppose the original bond can be purchased for $925. What is the bond’s yield to maturity?
a. An 8 ½%, 25-year, $1,000 bond is presently selling at a yield-to-maturity (YTM) of 9 4%. Assuming annual interest payments, what should you pay for the bond? b. What should you pay if interest is paid semiannually? c. Instead of a 25-year bond, they decide to issue 15-year bonds with annual payments. What should you pay for this bond if the YTM is 9 4%? Explain the differences in prices changes for (3a) and (3c) in terms of maturity. d. You buy an 8%, 15-year, $1,000 bond that pays interest annually when it is selling with a YTM of 7%. Immediately after you buy the bond, the YTM increases to 9%. What was the percentage change in the price of the bond? A bond has a market price that exceeds its face value. What type of bond is this? Describe the relationship between the coupon rate and the YTM. е.