Naima Inc. has issued the following bonds that pays interest semiannually: i) $4,000,000 Eight-years note, annual coupon rate 6%, annual market rate 8% ii) $7,000,000 Four-years note, annual coupon rate 10%, annual market rate 8% Required: a) Calculate the sellling price of the each bond and the relevant discount or premium, if any. b) Compute the the interest expense. interest payment and amortized discount or premium at the end of the first two payment periods for each bond. c) Record the semi-annual interest payments, interest expenses and amortization of discount or premium in the Financial Statement Effects Template for the first two payment periods for each bond. Use Excel function to show your working.

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
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Naima Inc. has issued the following bonds that pays interest semiannually:
i) $4,000,000 Eight-years note, annual coupon rate 6%, annual market rate 8%
ii) $7,000,000 Four-years note, annual coupon rate 10%, annual market rate 8%
Required:
a) Calculate the sellling price of the each bond and the relevant discount or premium, if any.
b) Compute the the interest expense. interest payment and amortized discount or premium at the end of the first two
payment periods for each bond.
c) Record the semi-annual interest payments, interest expenses and amortization of discount or premium in the
Financial Statement Effects Template for the first two payment periods for each bond.
Use Excel function to show your working.
Transcribed Image Text:3 4 5 6 7 8 9 10 11 12 13 14 Naima Inc. has issued the following bonds that pays interest semiannually: i) $4,000,000 Eight-years note, annual coupon rate 6%, annual market rate 8% ii) $7,000,000 Four-years note, annual coupon rate 10%, annual market rate 8% Required: a) Calculate the sellling price of the each bond and the relevant discount or premium, if any. b) Compute the the interest expense. interest payment and amortized discount or premium at the end of the first two payment periods for each bond. c) Record the semi-annual interest payments, interest expenses and amortization of discount or premium in the Financial Statement Effects Template for the first two payment periods for each bond. Use Excel function to show your working.
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