ABC Co. is contemplating on issuing a 12%, 3-year, Principal is due at maturity but interest is due semi-annually every July 1 and December 31. ABC determines that the current market rate on January 1, 20x1 is 14%. ABC Co. plans to issue the bonds on September 30, 20x1. P1,000,000 bonds. 15. How much is the estimated total proceeds from the issuance of the bonds on September 30, 20x1? a. 666,342 b. 962,563 c. 952,334 d. 992,563
ABC Co. is contemplating on issuing a 12%, 3-year, Principal is due at maturity but interest is due semi-annually every July 1 and December 31. ABC determines that the current market rate on January 1, 20x1 is 14%. ABC Co. plans to issue the bonds on September 30, 20x1. P1,000,000 bonds. 15. How much is the estimated total proceeds from the issuance of the bonds on September 30, 20x1? a. 666,342 b. 962,563 c. 952,334 d. 992,563
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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Transcribed Image Text:CASE 6
ABC Co. is contemplating on issuing a 12%, 3-year, P1,000,000 bonds.
Principal is due at maturity but interest is due semi-annually every
July 1 and December 31. ABC determines that the current market rate on
January 1, 20x1 is 14%. ABC Co. plans to issue the bonds on September
30, 20x1.
15. How much is the estimated total proceeds from the issuance of the
bonds on September 30, 20x1?
a. 666,342
b. 962,563
c. 952,334
d. 992,563
CASE 7
On January 1, 20x1, SALIENT PROMINENT Co. issued 1,000, P4,000, 12%, 3-
year bonds for P4,412,336. Principal is due on December 31, 20x3 but
interests are due annually every year-end. In addition, SALIENT incurred
bond issue cost of P213,388.The effective interest rate before adjustment
for transaction costs is 8%.
16. How much is the carrying amount of the note on December 31, 20x1?
a. 4,019,832
b. 4,198,948
c. 4,288,776
d. 4,138,843
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