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From page 9-7 of the VLN, on December 31, 20XE after the company paid all of the interest payments, how much will the company pay (at maturity).

From page 9-7 of the VLN, on December 31, 20XE after the company paid all of the interest payments, how much will the company pay (at maturity).

Essentials Of Investments
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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From page 9-7 of the VLN, on December 31, 20XE after the company paid all of the interest payments, how much will the company pay (at maturity).
Bond Unblity (Carrying Value) $1,000 Maturity BL 995.28 NA D B 1. XXX Discount $963 (12x) 1 3 10 Interest payment periods, every 6 months Note: this differs from the book Date Interest expense @ Interest payment @ Amortization Carrying Value at end .06 .055 1/1/XA 6/30/XA 12/31/XA 6/30/хB $963.20 12/31/XE $59.72 $1,000 At what price did the company issue the bonds? Interest expense for the second interest payment: Bond liability after the 2nd interest payment: Bond Retirement at Maturity Record the retirement of the bond on December 31, 20XE (after all interest payments have been made)
Transcribed Image Text:Bond Unblity (Carrying Value) $1,000 Maturity BL 995.28 NA D B 1. XXX Discount $963 (12x) 1 3 10 Interest payment periods, every 6 months Note: this differs from the book Date Interest expense @ Interest payment @ Amortization Carrying Value at end .06 .055 1/1/XA 6/30/XA 12/31/XA 6/30/хB $963.20 12/31/XE $59.72 $1,000 At what price did the company issue the bonds? Interest expense for the second interest payment: Bond liability after the 2nd interest payment: Bond Retirement at Maturity Record the retirement of the bond on December 31, 20XE (after all interest payments have been made)
BC Corporation wants to issue flve-year $1,000 bonds 11% stated rate paying semi-annual interest. Market rate of Interest is 12%; (therefore, semiannual would be 5.5% stated rate and 6% market rate respectively). What Is the bond issue price on January 1, 20XA? Cosh flows provided by the bond ($1,000 face, 11% semi-onnual interest) $1000 $55 $55 $55 $55 $55 $55 $55 $55 $55 $55 1 2 4 8. 6. 10 Calculate the Issue price of the bond: CASH FLOW X PV FACTOR (use market rate) = Present Value Present Value of Principal (Face) Present Value of Interest Payment (Face x stated) Issue price (sales price) OR with BAII Plus Calculator PMT СРТ PV VY FV The issue price: Calculate the difference: Bond issue price Bond face amount Difference Record the bond issuance on January 1, 20XA Record the interest payment on June 30, 20XA
Transcribed Image Text:BC Corporation wants to issue flve-year $1,000 bonds 11% stated rate paying semi-annual interest. Market rate of Interest is 12%; (therefore, semiannual would be 5.5% stated rate and 6% market rate respectively). What Is the bond issue price on January 1, 20XA? Cosh flows provided by the bond ($1,000 face, 11% semi-onnual interest) $1000 $55 $55 $55 $55 $55 $55 $55 $55 $55 $55 1 2 4 8. 6. 10 Calculate the Issue price of the bond: CASH FLOW X PV FACTOR (use market rate) = Present Value Present Value of Principal (Face) Present Value of Interest Payment (Face x stated) Issue price (sales price) OR with BAII Plus Calculator PMT СРТ PV VY FV The issue price: Calculate the difference: Bond issue price Bond face amount Difference Record the bond issuance on January 1, 20XA Record the interest payment on June 30, 20XA
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