Consolidated Enterprises issues €10 million facevalue, ten-year bonds with a coupon rate of 7.5percent on January 1, 2009. At the time ofissuance, the market interest rate is 4.0 percent.Using the effective interest rate method ofamortization, the carrying value at the beginning of2009 will beinterest expense in 2009 will beTheDecember 31, 2009 will begreater than €12.7 millionsless than €12.7 millionsequal to €12.7 millionsequal to €0.75 millionsgreater than €0.75 millionsless than €0.75 millions. The carrying value on

Initial Information:Face Value of the Bond: €10 millionCoupon Rate: 7.5%Market Interest Rate:…

Answered: Consolidated Enterprises issues €10…

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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Debond Corp. issues £1,000,000 worth of fi ve-year bonds, dated 1 January 2010, whenthe market interest rate on bonds of comparable risk and terms is 6 percent. Th e bondspay 5 percent interest annually on 31 December. What are the sales proceeds of thebonds when issued, and how is the issuance refl ected in the fi nancial statements?
On April 1, 2016, Lerner Corporation issued $120,000 of five-year, 10% bonds at a market (effective) interestrate of 8%. Interest is payable semiannually on April 1 and October 1What is the amount of the semi-annual interest payment?Will the bonds be issued at a discount or premium?Present Value of the Semiannual Interest PaymentInterest RateNumber of PeriodsFactorPresent Value of the Interest PaymentsPresent Value of the Bond Face AmountInterest RateNumber of PeriodsFactorPresent Value of the FaceBonds ProceedsAmount of Discount or Premium
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¥1 billion, 7%, 10-year bonds are issued at face value. Interest will be paid semi-annually. When calculating the market price of the bond, the present value of O ¥1 billion received in 10 periods must be calculated. O ¥70000000 received for 10 periods must be calculated. ¥35000000 received for 10 periods must be calculated. O ¥1 billion received in 20 periods must be calculated.
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On January 1, 2024, ABC Corp. issued 54 million of 10 year bonds at an 8%stated interest rate to be paid annually. ABC Corp. issued the bonds for S3, 501, 514 since the market rate of interest was 10% . What is the carryingvalue of the bond that ABC Corp. would report on its December 31, 2024balance sheet? (round to the nearest dollar) S3,531,665S3, 500,000S3,526,438S3,564,832S4,000,000
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $210,000. The Cortland bonds have a stated interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.): January 1, 2021 11.0 % June 30, 2021 12.0 % Required:1. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2021 (ignoring brokerage fees), and prepare a journal entry to record the purchase.2. Prepare all appropriate journal entries related to the bond investment during 2021, assuming Ithaca accounts for the bonds as a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.3. Prepare all appropriate…
On January 1, 2022, Nuptam Corp. issued $1,300,000 par value, 8%, 3-year bonds when the market rate of interest was 10%. Interest is payable annually each December 31. Nuptam incurred bond issue costs of $22,000. What is the journal entry when Nuptam issued the bonds? Prepare the amortization table for the bonds. Future Value of $1 table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table What is the journal entry when Nuptam issued the bonds? (Record debits first, then credits. Exclude explanations from any journal entries.) January 1, 2022 Account Cash Discount on Bonds Payable Bonds Payable

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