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

Problem 1PS

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Karson Company. issues 10-year bonds maturity, face value of $200,000 and16% interest rate. If the bonds are issued at 180,000 how much do you expect the market interest rate: Select one: a. % 6 b. % 4 C. %10 d. The answer does not exist e. % 8 Previous page Next page
aa.2 A company issued 8%, 10-year bonds with a face amount of $100 million. The market yield for bonds of similar risk and maturity is 4%. Interest is paid semiannual. At what price did the bonds sell? NOTE: Do not round intermediate calculations. Round your final answer to the nearest whole dollar.
Find the total proceeds (in $) from the sale of 30 bonds with a coupon rate of 8.75 and a current price of 96.575. (Round your answer to the nearest cent.) The commission charge is $6.00 per bond. The date of the transaction is 145 days since the last interest payment. $2821.53 x
A company issues $12 million in term bonds on March 1, Year One, for face value. The bonds pay a stated cash interest rate of 10 percent per year. Interest payments are made every February 28 and August 31. What is the amount of interest payable reported on the December 31, Year One, balance sheet? Responses $600,000 $1,000,000 $400,000 $1,200,000
Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. What was the sales price of the bonds? Were they issued at a discount, a premium, or at par?
Cox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. 1. One step in calculating the issue price of the bonds is to multiply the principal by the table value for a. 10 periods and 10% from the present value of 1 table. b. 20 periods and 4% from the present value of 1 table. c. 10 periods and 8% from the present value of 1 table. d. 20 periods and 5% from the present value of 1 table. 2. Another step in calculating the issue price of the bonds is to a. multiply $10,000 by the table value for 10 periods and 10% from the present value of an annuity table. b. multiply $10,000 by the table value for 20 periods and 5% from the present value of an annuity table. c. multiply $10,000 by the table value for 20 periods and 4% from the present value of an annuity table. d. none of these.
You invest in bonds yielding an interest rate of 2.5 percent, utility stock yielding an interest rate of 5.3 percent, and a bank certificate yielding an interest rate of 7.25 percent. The total interest earned in all three accounts in one year was $5,061.30 dollars. The amount allocated to the bonds was 200 less than the amount allocated to the bank certificate, and the amount allocated to the utility stock was 2 times the amount allocated to the bonds. What was the total amount of money the person had to invest?The total amount invested was $
Determine the interest payment for the following three bonds. (Assume a $1,000 par value.) (Round your answers to 2 decimal places.) 3.35 percent coupon corporate bond (paid semiannually) 4.10 percent coupon Treasury note (paid semiannually) Corporate zero-coupon bond maturing in 10 years $ $ $ 16.75 20.50 0
compute the cash proceeds from bond issues under the following terms. for each case, indicate whether the bonds sold at a premium or discount Cash Proceeds Discount or Premium a. Pear, Inc. issued $225,000 of 10-year, 8 percent bonds at 101. b. Apple, Inc. issued $133,000 of five-year, 12 percent bonds at 98. c. Cherry Co. issued $158,000 of five-year, 6 percent bonds at 102 1/4. d. Grape, Inc. issued $58,000 of four-year, 8 percent bonds at 97.
Warbler's Whistles Inc. capital structure includes the following. Bond A: 23,844 bonds with a 5.5% coupon rate, $1,000 par value, with 18.5 years to maturity, selling for $845.70; the bonds compound semiannually. Bond B: 8,680 bonds with a 0% coupon rate, $1,000 par value, with 6 years to maturity, selling for $790.10; the bonds compound semiannually. Common stock: 1,696,220 shares outstanding, selling for $47.28 per share; the beta is 1.4. The market return is currently 12.68%, and the U.S. T-bill currently returns 3.3%. If the tax rate is 21%, what is the company's weighted average cost of capital (WACC)?
a corporation sold an issue of 15 years bonds having a total face value of 12,000,000 for 11,000,000. the bond bear interest 15% payable semiannually . the company wishes to established a sinking fund for retiring the bond issue and will make semiannual deposit that will earn 12% compunded seminuannually. show the cash flow diagram and compute the annual costfor interest and redemption of these bond.
A company issues $12 million in term bonds on March 1, Year One, for face value. The bonds pay a stated cash interest rate of 10 percent per year. Interest payments are made every February 28 and August 31. On financial statements for Year One, what is recognized as interest expense on the income statements? Responses $12,000,000 $300,000 $1,200,000 $1,000,000

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