Bryant Inc. just issued $1,000 par 30-year bonds. The bonds sold for $1,107.20 and pay interest semiannually. Investors require a rate of 7.75% on the bonds. What is the bonds' coupon rate? a. 4.125% b. 7.750% c. 8.675% d. 9.333%

Bryant Inc. just issued $1,000 par 30-year bonds. The bonds sold for $1,107.20 and pay interest semiannually. Investors require a rate of 7.75% on the bonds. What is the bonds' coupon rate? a. 4.125% b. 7.750% c. 8.675% d. 9.333%

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2PB: Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity...

See similar textbooks

Related questions

Q: Krystian Inc. issued 12-year bonds with a face value of $110,000 and a stated rate of 5% when the…

A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…

Q: Firm A issued $1,000 par 10-year bonds. The bonds sold for $907.20 and pay interest semi-annually.…

A: In the given question we require to calculate the coupon rate on Firm A 's bonds using following…

Q: Atom Endeavour Co. Issued $27 million face amount of 5.6% bonds when market Interest rates were…

A: If the coupon rate is lower than the market interest rate, then the bonds are issued at a discount.…

Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.325%.…

A: Coupon rate = 9.325% Purchase Price = 89.875 commission = $9

Q: Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the…

A: Bonds Payable: Bonds Payable are the financial instruments that are issued with a promise or…

Q: On July 1, Somers Inc. issued $200,000 of 10 %, 10-year bonds when the market rate was 12%. The…

A: Issue price of the bonds means the cash received from the issue of the bonds. Issue price of the…

Q: 2. Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the…

A: I am answering the first question (2) as per the company policies. Bond interest is paid by the…

Q: On January 1, a company issued $19,383,400 of 12 year bonds with a coupon rate of 7%, payable…

A: Compound = 2 (semiannually) Time = t = 12 * 2 = 24 Coupon rate = 7/2 = 3.5% Interest rate = r = 5/2…

Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.325%.…

A: Given, Number of bonds bought is 10 Coupon rate 9.325% Purchase price 89.875

Q: On July 1, Somers Inc. issued $300,000 of 10%, 10-year bonds when the market rate was 12%. The bonds…

A: Issue price of bonds refers to the price at which the bonds are actually issued.

Q: When the market rate of interest was 12%, Halprin Corporation issued $678,000, 11%, four-year bonds…

A: Selling price of bond issue = Present value of redemption value + Present value of interest…

Q: Use the following to answer questions 8 – 10 (Round answers to the nearest dollar) BZ Corp issues…

Q: When the market rate of interest was 12%, Halprin Corporation issued $397,000, 11%, four-year bonds…

A: Bonds are a form of loan or debt issued by the company, on which company has to make regular…

Q: Grohl Co. issued 11-year bonds a year ago at a coupon rate of 11 percent. The bonds make semiannual…

A: Given information in question Coupon rate = 11% (semi-annual…

Q: A company issued bonds with a 30-year maturity, a $1,000 par value, a 13.0% coupon rate, and…

A: A bond refers to a debt instrument used to raise capital from investors rather than traditional…

Q: You purchase 30 bonds with a coupon rate of 5.875% and a current market price of 89. The commission…

A: Entities or companies can raise cash by borrowing from investors using bonds. When a company issues…

Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.925%.…

A: Yield refers to the expected return on the underlying security. Investors periodically calculate the…

Q: A corporation issues a bond with a par value of $9,000 in one year. Assume that the bond is sold…

A: Interest Amount= Current Value x Rate of Interest x Period in Years Interest Amount = Maturity Value…

Q: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semi-annual…

A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing…

Q: Krystian Inc. issued 8-year bonds with a face value of $100,000 and a stated rate of 5% when the…

A: Answer A) Calculation of Total Amount to be received over the Bond Period Total Amount to be…

Q: ABC Corporation issued a bond that pays coupons semiannually. It has a 15-year maturity, and the…

A: Price of bond = Present value of bond + Present value of maturity value Price of bond = [ Interest…

Q: Krystian Inc. issued 12-year bonds with a face value of $110,000 and a stated rate of 5% when the…

A: Bonds payable means bonds have been issued to generate cash. As the cash borrowed is to be paid the…

Q: 2. Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the…

A: Step 1The bonds are the debt instrument, the government or corporation generally issues these…

Q: On July 1, Somers Inc. issued $300,000 of 12%, 10-year bonds when the market rate was 14%. The bonds…

A: Requirement A: Compute the selling price.

Q: dorin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon…

A: The bonds are debt financial instruments issued by corporations and governments for raising debt…

Q: Reynolds Co issued $87 million face amount of 11.00% bonds when market interest rates were 10 90%…

A: Solution: Bonds are issued by a company to borrow funds for the business. It is having a par value,…

Q: Smithson Co.'s Class A bonds have 10 years to go until maturity. They have a $1,000 face value and…

A: Given: Face value = $1000 Coupon rate = 8% Number of years = 10

Q: Grohl Co. issued 8-year bonds a year ago at a coupon rate of 11 percent. The bonds make semiannual…

A: Solution:-Bond price means the price at which a bond should trade in the market. It is the summation…

Q: Atom Endeavour Co. issued $48 million face amount of 12.0% bonds when market interest rates were…

A: a. Calculate the amount of interest that will be paid annually on this bond. Annual interest…

Q: When the market rate of interest was 12%, Halprin Corporation issued $395,000, 11%, four-year bonds…

A: A bond is a borrowing security issued by a company to raise funds from the market by making an…

Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.625%.…

A: The question is based on the concept of Financial Accounting

Q: Brooks Books’ bonds have 13 years remaining to maturity. Interest is paid annually; they have a…

A: It is a case of calculating the price of the bond. It shows that the bond is priced at a premium or…

Concept explainers

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:

Question

Bryant Inc. just issued $1,000 par 30-year
bonds. The bonds sold for $1,107.20 and
pay interest semiannually. Investors require
a rate of 7.75% on the bonds. What is the
bonds' coupon rate?
а. 4.125%
b. 7.750%
C. 8.675%
d. 9.333%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction to Question:

VIEW

Step 2: Calculation of Coupon rate:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?
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?
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 7% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?
OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. A. more than 6% B. less than 6% C. equal to 6% D. cannot be determined from the information given.
Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity date. Interest is to be paid semi-annually and the market rate of interest is 8%. If the bonds sold at 113.55, what amount was received upon issuance?
A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
Atom Endeavour Co. issued $48 million face amount of 12.0% bonds when market interest rates were 13.38% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Annual interest payment b. Were the bonds issued at a premium or discount? O Premium O Discount c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? O Interest expense will be less than the interest paid. O Interest expense will be more than the interest paid. O Interest expense will be equal to the interest paid.
Atom Endeavour Co. Issued $27 million face amount of 5.6% bonds when market Interest rates were 6.24% for bonds of similar risk and other characteristics. Required: a. How much Interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars, 1.e. 1,234,567.) Annual interest payment b. Were the bonds issued at a premium or discount? O Premium O Discount c. Will the annual Interest expense on these bonds be more than, equal to, or less than the amount of Interest paid each year? O Interest expense will be less than the Interest paid. O Interest expense will be more than the Interest paid. O Interest expense will be equal to the Interest paid.