On December 31, 2020, Balbond issued 3,000 of its 15-year 6%, P1,000 face value bonds for P2,486,431. Interest is payable annually every December 31. The effective rate for similar instruments is 8%. How much is the carrying value of the bond as of December 31, 2033?

On December 31, 2020, Balbond issued 3,000 of its 15-year 6%, P1,000 face value bonds for P2,486,431. Interest is payable annually every December 31. The effective rate for similar instruments is 8%. How much is the carrying value of the bond as of December 31, 2033?

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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Question

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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