Firm A Face value- RM 1000000 Maturity-10 years Coupon rate-8% Effective rate-7% Bond value= RM1070188 Firm B Face value- RM1000000 Maturity-10 years Coupon rate-8% Effective rate-9% Bond value= RM 935816 Do amortisation table for firm A and firm B with these elements: (Year, Beginning amount, effective interest, coupon interest paid, premium amortisation, ending amount)

Firm A Face value- RM 1000000 Maturity-10 years Coupon rate-8% Effective rate-7% Bond value= RM1070188 Firm B Face value- RM1000000 Maturity-10 years Coupon rate-8% Effective rate-9% Bond value= RM 935816 Do amortisation table for firm A and firm B with these elements: (Year, Beginning amount, effective interest, coupon interest paid, premium amortisation, ending amount)

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.1E

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Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Pricing bonds Bond prices depend on the market rate of interest, stated rate of interest and time. Requirements Compute the price of the following 8% bonds of Country Telecom. $100,000 issued at 75.25 $100,000 issued at 94.50 $100,000 issued at 103 50 $100,000 issued at 94.50 $100,000 issued at 103.25 2. Which bond will Country Telecom have to pay the most to retire at maturity? Explain your answer.
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Firm A Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 7% Redeem at 101% Firm B Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 9% Redeem at Fair value Do amortisation table- effective rate for Firm A and Firm B with these elements: (Year, beginning amount, effective rate, coupon interest paid, discount amortisation and ending amount) Transaction cost = RM 45000
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