Company A has issued $2 million (notional principal) in five-year bonds with a floating (variable) annual interest rate defined as the LIBOR plus 1.2% (Assume that LIBOR is at 2.3% in year 1 and increases by 0.55% per year thereafter). What is the total amount company A will pay in five years? a. 85,000 Ob. $115,000 Oc. $98,750 d. $128,750

Company A has issued $2 million (notional principal) in five-year bonds with a floating (variable) annual interest rate defined as the LIBOR plus 1.2% (Assume that LIBOR is at 2.3% in year 1 and increases by 0.55% per year thereafter). What is the total amount company A will pay in five years? a. 85,000 Ob. $115,000 Oc. $98,750 d. $128,750

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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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
4. Compute the annual cost for interest and redemption of these bonds
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One hungred $1,000 bonds having a bond rate of 8% per year payabie quarterly are purchased for $98,000, kept for 7 years, and sold for $95,000. Determine the "effective" annual yield rate on the bond investment. A. 11.50% В. 9.17% С. 8.87% D. 2.22%
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1. On January 1, 20X2, Tanangonan Company acquired all the assets and assumed all the liabilities of Ong Company. In exchange for the net assets of Ong, Tanangonan gave its bond payable with a maturity value of P600,000 with a stated rate of 10% interest payable semiannually on June 30 and December 31. The said bond will mature after 10 years and has a yield rate of 12%. The Statement of Financial Position (SFP) of both companies as of January 1, 20X2 were as follows: Tanangonan Book Value Ong Book Value Fair Value P250,000 352,700 Cash P114,000 150,000 232,000 100,000 410,000 (170,500) 136,450 (90,450) P881,500 P114,000 135,000 310,000 315,000 54,900 Receivables Inventories 848,300 700,000 950,000 (325,000) 262,750 (70,050) P2,968,700 Land Buildings Accumulated Depreciation – Buildings Equipment Accumulated Depreciation – Equipment Total Assets 39,450 P968,350 Current Liabilities Bond Payable Common Stock, P15 par value Common Stock, P5 par value Other Contributed Capital Retained…
6. Ellesmere Corporation issues 1 million $1 par value bonds. The stated interest rate is 6% per year and the interest is paid twice a year. What is the real interest rate of the bond? ____ A. 6% B.3% C. 12% D. (1+6%/2)2-1 10.What is the present value of $10,000 per year perpetuity at an interest rate of 5%?____ A. $10,000 B. $100,000 C. $200,000 D. None of the above Please provide formula too.
Hermosa Vista Company issued $180,000 5-year, 6.00% bonds and received $183,843 in cash. The market rate of interest when the bonds were issued was 5.50%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses simplified effective-interest amortization? Multiple Choice $9,900.00 $10,111.37 $10,800.00 $11,030.58

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