Accounting for Bonds Sold at a Discount The Peoples National Bank raised capital through the sale of $50 million face value of four percent coupon rate, ten-year bonds. The bonds paid interest semiannually and were sold at a time when equivalent risk- rated bonds carried a yield rate of six percent. Round all answers to the nearest whole number. a. Calculate the proceeds that The Peoples National Bank received from the sale of the six percent bonds. $382,000 x b. Calculate the interest expense on the bonds for the first year that the bonds are outstanding. $4,000,000 x c. Calculate the book value of the bonds at the end of the first year. $ 39,100,000 x
Accounting for Bonds Sold at a Discount The Peoples National Bank raised capital through the sale of $50 million face value of four percent coupon rate, ten-year bonds. The bonds paid interest semiannually and were sold at a time when equivalent risk- rated bonds carried a yield rate of six percent. Round all answers to the nearest whole number. a. Calculate the proceeds that The Peoples National Bank received from the sale of the six percent bonds. $382,000 x b. Calculate the interest expense on the bonds for the first year that the bonds are outstanding. $4,000,000 x c. Calculate the book value of the bonds at the end of the first year. $ 39,100,000 x
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
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Transcribed Image Text:Accounting for Bonds Sold at a Discount
The Peoples National Bank raised capital through the sale of $50 million face value of four percent coupon rate, ten-year bonds. The bonds paid interest semiannually and were sold at a time when equivalent risk-
rated bonds carried a yield rate of six percent.
Round all answers to the nearest whole number.
a. Calculate the proceeds that The Peoples National Bank received from the sale of the six percent bonds.
$ 382,000 X
b. Calculate the interest expense on the bonds for the first year that the bonds are outstanding.
$4,000,000 X
c. Calculate the book value of the bonds at the end of the first year.
$ 39,100,000 X
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