1. How much is the estimated purchase price of the bonds on January 1, 2021? On january 1, 2021. ABC Co. contemplates on acquiring 10%, 3,000,000 bonds as investment. Principal on the bonds will mature in four semi-annual installments as followsJuly 1, 20211,200,000December 31, 2021800,000July 1, 2022December 31, 2022600,000400,000Total3,000,000Interest on the outstandinng principal balance is also due semi-annually. The effective rate as of January 1, 2021 is 8%.

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How much is the estimated purchase price of the bonds on January 1, 2021?

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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Question

1. How much is the estimated purchase price of the bonds on January 1, 2021?

On january 1, 2021. ABC Co. contemplates on acquiring 10%, 3,000,000 bonds as investment. Principal on the bonds will mature in four semi-annual installments as follows
July 1, 2021
1,200,000
December 31, 2021
800,000
July 1, 2022
December 31, 2022
600,000
400,000
Total
3,000,000
Interest on the outstandinng principal balance is also due semi-annually. The effective rate as of January 1, 2021 is 8%.

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