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 discoun
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 discoun
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Question
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
Expert Solution
Step 1
Answer: Correct option is A: $36,798 premium
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