Alton Corp. purchased five $1,000 5% bonds of Solar Corporation when the market rate of interest was 14%. Interest ispaid semiannually, and the bonds will mature in nine years.Using the PV function in Excel®, compute the price Alton paid (the present value) for the bond investment. (Assume thatall payments of interest and principal occur at the end of the period. Round your answer to the nearest cent.)Alton paidon the bond investment.

Price of the bond will be equal to the sum of present values of each future coupon payment and the…

Answered: Alton Corp. purchased five $1,000 5%…

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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Sagar
Godo
warded Denzel Corporation is planning to issue bonds with a face value of $630,000 and a coupon rate of 7.5 percent. The bonds mature in 4 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Denzel uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: 1. and 2. Prepare the journal entries to record the issuance of the bonds and interest payment on June 30 of this year. 3. What bonds payable amount will Denzel report on its June 30 balance sheet?
Gadget Co invests in a $100,000 bond with an 8% coupon rate. The market rate of interest is 10% annually and it is a 5 year bond 1. Assuming the company invests on January 1st and only pays $92,418 for this bond, what is the journal entry on January 1st? 2. Prepare a full amortization table for this bond: Purchase Year 1 Year 2 Year 3 Year 4 Year 5 Cash Received Interest Revenue Amortized Value Carrying Value stess Questions 3 and 4 on the next tab +
Find the purchase price of each bond bought on the given dividend date. Use another sheet of paper for your solution. a. Atty. Bustamante agreed to sell her condominium unit to a campanera worth 2.4 million pesos in two payment schedules: On the first 5 months, the price of the unit is amortized at 3% quarterly. The balance amount will be paid at 4% semiannually for 7 months. Prepare the amortization schedule. b. The Cauayan Consumers Cooperative has taken out a 10-year mortgage for P92, 000 at an annual rate of 5%. A table for the monthly payment on PI, 000 loan is used in finding the monthly amortization. Complete the amortization schedule below. Round off your final answer to the nearest cent. Monthly Payment Paid on Payment Number Interest Balance Paid Principal P92, 000 1 2 3
On 1 July 2021 Michael Ltd. issues $1 million in five – year debentures that pay interest each six months at a coupon rate of 10% per annum. At the time of issuing the securities, the market requires a rate of return of 12% per annum . Interest expense is determined using the effective-interest method. Required: Determine if the issuance of the debenture is at premium or discount? Determine the issue price of the debentures? Prepare journal entries at issue date on 1 July 2021 (assuming the debentures are issued privately)? Pass the journal entry for the first interest payment ?
Park Corporation is planning to issue bonds with a face value of $2,800,000 and a coupon rate of 7 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective - interest amortization method and also uses a premium account. Assume an annual market rate of interest of 6.0 percent. (FV of $1, PV of S1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: 1. and 2. Prepare the journal entry to record the issuance of the bonds and the interest payment on June 30 of this year 3. What bonds payable amount will Park report on its June 30 balance sheet?
A $10,000, 10-year corporate bond is offered at a premium for $11,000. The bond rate is 10% 6) per year compounded quarterly. If John wishes to earn 8% per year compounded quarterly on the bond investment, should he purchase the bond assuming he keeps the bond till it matures and then redeems it at face value? Explain. Show all work.
Serotta Corporation is planning to issue bonds with a face value of $440,000 and a coupon rate of 12 percent. The bonds mature in two years and pay interest quarterly every March 31, June 30, September 30, and December 31. All of the bonds were sold on January 1 of this year. Serotta uses the effective-interest amortization method and also uses a premium account. Assume an annual market rate of interest of 8 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) 1. Provide the journal entry to record the issuance of the bonds January 1.
A 10-year, 12.00%, $5,000 bond that pays dividends quarterly can be purchased for $4,456. This means that $4,456 is spent on the bond now. Every quarter, $150.00 is provided to the purchaser as the dividend. After 10 years, $5,000 is given to the purchaser. If the bond is purchased and pays as scheduled, which of the following ranges of effective rate of return will the purchaser receive? 12.00% 12.50% - 12.50% 13.75% - 14.00% - 15.00% - 15.01% 17.01%
Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The bonds had a 7.61 percent coupon rate and paid interest annually. It is now 12 years later. The current market rate of interest on the Bright Sun bonds is 11.08 percent. What is the current market price (intrinsic value) of the bonds? Round the answer to two decimal places.
Please answer all questions and show all calculations. Thank you.

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