ABC Company issued a 3-year, 12%, 2,000 of P 1,000 face value bonds with warrants at 98 on January 1, 2020. The nominal rate is payable annually on December 31. When the bonds are issued, the prevailing market rate of interest for similar bonds without warrants is 15% per annum. Each bond is accompanied by a warrant that permits the bondholder to purchase 20 shares of common stock, par P 30, at P45 per share. How much is the amount allocated to warrants to be recognized by ABC Company? (For present value factors, do not round off) * O P 96,993.51 O P 96,939.51 O P 99,969.51 O P 184,109.88
ABC Company issued a 3-year, 12%, 2,000 of P 1,000 face value bonds with warrants at 98 on January 1, 2020. The nominal rate is payable annually on December 31. When the bonds are issued, the prevailing market rate of interest for similar bonds without warrants is 15% per annum. Each bond is accompanied by a warrant that permits the bondholder to purchase 20 shares of common stock, par P 30, at P45 per share. How much is the amount allocated to warrants to be recognized by ABC Company? (For present value factors, do not round off) * O P 96,993.51 O P 96,939.51 O P 99,969.51 O P 184,109.88
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ABC Company issued a 3-year, 12%, 2,000 of P 1,000 face value bonds with warrants at 98 on
January 1, 2020. The nominal rate is payable annually on December 31. When the bonds are
issued, the prevailing market rate of interest for similar bonds without warrants is 15% per
annum. Each bond is accompanied by a warrant that permits the bondholder to purchase 20
shares of common stock, par P 30, at P45 per share.
How much is the amount allocated to warrants to be recognized by ABC Company? (For
present value factors, do not round off) *
O P 96,993.51
O P 96,939.51
O P 99,969.51
O P 184,109.88
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