**Final Questions**1. **Determine the total interest expense for Year 1.** $ __________2. **Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?** - [ ] Yes - [ ] No3. **Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)** | Column | Value | |--------|-------| | Present value of the face amount | $ __________ | | Present value of the semiannual interest payments | $ __________ | | Price received for the bonds | $ __________ |**Explanation of Graphs or Diagrams:**- There are no graphs or diagrams in this image. The content consists entirely of text-based questions and input fields that appear to be a part of an online educational platform. The questions pertain to bond valuation and interest expense calculation. ---### Instructions for Bond Issuance and Interest Payment Journal EntriesOn July 1, Year 1, Danzer Industries Inc. issued $30,000,000 of 10-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $28,279,368. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.#### Required:1. **Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.** 2. **Journalize the entries to record the following:** - a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) - b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.)3. **Determine the total interest expense for Year 1.**4. **Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?**5. **Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)***Refer to the Chart of Accounts for exact wording of account titles.*---### Explanation#### Section 1: Journalizing Cash Proceeds- Details the process and entry required to document the proceeds from the bond issuance.#### Section 2: Journalizing Interest Payments and Amortization- **Subsection a:** Covers the journal entry for the first semiannual interest payment and corresponding bond discount amortization using the straight-line method.- **Subsection b:** Details the subsequent semiannual interest payment on June 30, Year 2, including the amortization amount.#### Section 3: Interest Expense Calculation- Guides on how to determine the total interest expense for the first year.#### Section 4: Bond Proceeds and Market Rates- Explores if bond proceeds are always lower than the bond's face value when contract rates fall below market rates.#### Section 5: Bond Pricing Using Present Value Tables- Instructions on how to compute the actual received price of the

Discount on bond - It is the difference between the face value of a bond and the reduced price at…

Answered: Determine the total interest expense…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose that the current one-year rate (one-year spot rate) and expected one-year government bonds over years 2, 3 and 4 are as follows: 1R1 = 4.80%, E(2r1) = 5.45%, E(3r1) = 5.95%, E(4r1) = 6.10% Assume that there are no liquidity premiums. To the nearest basis point, what is the current rate for the four-year-maturity government bond? 5.57% 5.62% 5.83% 6.10%
3) On August 6, 2023, the Bank of Mexico (BANXICO) placed bonds with a nominal value of 10 pesos for 120 days and at a simple discount rate of 3.57% annually. What was the rate of return obtained by bonds buyers? options: 5.32 8.74 1.05 3.61
Calculate the purchase price of the $1,000 face value bond using the information given below. (Do not round the intermediate calculations. Round your final answer to 2 decimal places.) Issue date Maturity date Purchase date Coupon rate (%) Market rate (%) Dec 15, 1992 Dec 15, 2022 June 15, 2010 5.40 7.2 Assume that Bond interest is paid semiannually. The bond was originally issued at its face value. Bonds are redeemed at their face value at maturity. Market rates of return are compounded semiannually. Bond price $
Use the following tables to calculate the present value of a $672,000, 6%, 6-year bond that pays $40,320 ($672,000 x 6%) interest annually, if the market rate of interest is 7%. Present Value of $1 at Compound Interest Periods 6% 7% 1 0.94340 0.93458 0.90909 2 0.89000 0.87344 0.82645 3 0.83962 0.81630 0.75131 4 0.79209 0.76290 0.68301 5 0.74726 0.71299 0.62092 6 0.70496 0.66634 0.56447 7 0.66506 0.62275 0.51316 8 0.62741 0.58201 0.46651 9 0.59190 0.54393 0.42410 0.55839 0.50835 0.38554 10 Present Value of Annuity of $1 at Compound Interest Periods 1 2 3 4 5 6 7 8 9 5% 10 0.95238 0.90703 0.86384 0.82270 0.78353 0.74622 0.71068 0.67684 0.64461 0.61391 5% 0.95238 1.85941 2.72325 3.54595 4.32948 5.07569 5.78637 6.46321 7.10782 7.72173 6% 0.94340 1.83339 2.67301 3.46511 4.21236 4.91732 5.58238 6.20979 6.80169 7.36009 7% 0.93458 1.80802 2.62432 10% 10% 3.38721 4.10020 4.76654 5.38929 5.97130 6.51523 5.75902 7.02358 6.14457 Round your intermediate calculations and final answer to the nearest…
For the next three questions (1-3) assume what follows: Assume that you acquired a previously issued debt instrument. According to its specifications, it promised to pay $1,000 precisely in two years from the day of its original issue. At the time it was issued, investors anticipated 8.00% in interest on instruments with similar characteristics and risk level. *Note, standard rounding rules apply to all calculations! Q1. What price did you have to pay for this security - under assumption that you acquired it in a secondary market precisely three months after its original issuing, and taking into account that at the time of your acquisition investors anticipated to earn 10.00% in interest on securities with similar features and risk characteristics? A). $857.34 B). $846.37 3000K AS
Suppose that the current one-year rate (one-year spot rate) and expected one-year government bonds over years 2, 3 and 4 are as follows: 1R1 = 4.80%, E(201) = 5.45%, E(3r1) = 5.95%, E(41) = 6.10% Assume that there are no liquidity premiums. To the nearest basis point, what is the current rate for the four-year-maturity government bond? < A. 5.57% B. 5.62% C. 5.83% D. 6.10%
7. Suppose a bond is purchased with a settlement date of October 15 and the next coupon payment is on December 1. The par amount purchased on the bond is $100,000, and its annual coupon rate is 4% paid semiannually. (1) What is the accrued interest using the 30/360-day count convention? (2 points) (2) What is the accrued interest using the actual/actual day count convention? (2 points)
Assume all bonds have par or face value of 1,000
The Wall Street Journal reports that the current rate on 5-year Treasury bonds is 1.85 percent and on 10-year Treasury bonds is 3.35 percent. Assume that the maturity risk premium is zero. Calculate the expected rate on a 5-year Treasury bond purchased five years from today, Egrs). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected rate- my work
Please answer all 4 yield to maturity with explanations thx
Suppose we observe the following rates: 1R₁ = 0.95%, 1R2 = 1.45%, and E(2r1) = 0.927%. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2, L2 ? Note: Do not round intermediate calculations. Round your percentage answer to 3 decimal places (i.e., 0.12345 should be entered as 12.345). Liquidity premium %
Consider the following information for a period of years: Arithmetic Mean Long-term government bonds 7.6% Long-term corporate bonds 7.7 Inflation 4.6 What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the real return on long-term corporate bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

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