Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Determining bond amounts Savvy Drive-Ins borrowed money by issuing $3,500,000 of 9% bonds payable at 99.5. Interest is paid semiannually. Requirements How much cash did Savvy receive when it issued the bonds payable? How much must Savvy pay back at maturity? How much cash interest will Savvy pay each six months?
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Assume bonds payable are amortized using the
Determining bond amounts
Savvy Drive-Ins borrowed money by issuing $3,500,000 of 9% bonds payable at 99.5. Interest is paid semiannually.
Requirements
- How much cash did Savvy receive when it issued the bonds payable?
- How much must Savvy pay back at maturity?
- How much cash interest will Savvy pay each six months?
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