Danno Company issued $700,000, 8% bonds payable on January 1, 2023. The bonds mature in four years on January 1, 2027 and pay interest semi-annually on June 30th and December 31st. Danno’s fiscal year ends October 31st. On January 1, 2023, the market rate of interest for similarly risky investments was 7%. Danno retired 30% of the bond issue on January 1, 2025 by purchasing bonds in the open market. The market rate of interest on January 1, 2025 was 6%. - Complete the chart to compute the issue (selling) price of the bonds on January 1, 2023.
Danno Company issued $700,000, 8% bonds payable on January 1, 2023. The bonds mature in four years on January 1, 2027 and pay interest semi-annually on June 30th and December 31st. Danno’s fiscal year ends October 31st. On January 1, 2023, the market rate of interest for similarly risky investments was 7%. Danno retired 30% of the bond issue on January 1, 2025 by purchasing bonds in the open market. The market rate of interest on January 1, 2025 was 6%. - Complete the chart to compute the issue (selling) price of the bonds on January 1, 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Danno Company issued $700,000, 8% bonds payable on January 1, 2023. The bonds mature in four years
on January 1, 2027 and pay interest semi-annually on June 30th and December 31st. Danno’s fiscal year
ends October 31st. On January 1, 2023, the market rate of interest for similarly risky investments was
7%. Danno retired 30% of the bond issue on January 1, 2025 by purchasing bonds in the open market.
The market rate of interest on January 1, 2025 was 6%.
- Complete the chart to compute the issue (selling) price of the bonds on January 1, 2023.
Transcribed Image Text:Question 1
Compute
selling price
of bonds
Present value of principle
Present value of interest
Selling price
Amount
$
700,000
PV factor
Total
4% $
14,000
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