On January 1, 2017, Montercy Company issues 100 million unsecured bonds at an issue price 95 cents per unit. Transaction costs, that include underwiting fee. amount to P500,000. The bond pay interest of 4% at the end of the first year and thereafter interest paymer increases at 1%ó per year. The bond mature on December 31, 2021 are redeemable at the nominal value of PI cach. At the date of issue, Monterey Company has a credit rating of "ABB" and its market interest rate is 7.09a. But due to the imputation of the transaction cost, the effective rate of the debt is 7.21%.• What is the amort:zed cost of the deht as of December 31, 2019? a. P97.313,462 C. P100,491,439 d. P100,736,871 b. P99,329,763 3715
On January 1, 2017, Montercy Company issues 100 million unsecured bonds at an issue price 95 cents per unit. Transaction costs, that include underwiting fee. amount to P500,000. The bond pay interest of 4% at the end of the first year and thereafter interest paymer increases at 1%ó per year. The bond mature on December 31, 2021 are redeemable at the nominal value of PI cach. At the date of issue, Monterey Company has a credit rating of "ABB" and its market interest rate is 7.09a. But due to the imputation of the transaction cost, the effective rate of the debt is 7.21%.• What is the amort:zed cost of the deht as of December 31, 2019? a. P97.313,462 C. P100,491,439 d. P100,736,871 b. P99,329,763 3715
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On January 1, 2020, Monterey Company issues 100 million unsecured bonds at an issue price 95 cents per unit. Transaction costs, that include underwriting fee, amount to P500,000. The bonds pay interest of 4% at the end of the first year and thereafter interest payment increases at 1% per year. The bond mature on December 31, 2024 are redeemable at the nominal value of P1 each. At the date of issue, Monterey Company has a credit rating of “ABB” and its market interest rate is 7.09%. But due to the imputation of the transaction cost the effective rate of the debt is 7.21%. What is the amortized cost of the debt as of December 31, 2022?
Transcribed Image Text:On January 1, 2017, Monterey Company issues 100 million unsecurcd bonds at an issue price 95 cents per unit.
Transaction costs, that include underwriting fee, amount to P500,000. The bond pay interest of 4% at the end of
the first year and thereafter interest paymer: increases at 1%% per year. The bond mature on December 31, 2021
are redeemable at the nominal value of P'l cach. At the date of issue, Monterey Company has a credit rating of
"ABB" and its market interest rate is 7.09%o. But due to the imputation of the transaction cost, the effective rate
of the debt is 7.21%.• What is the amortized cost of the deht as of December 31, 2019?
4.
a. P97.313,462
t. P99,329,763
c. PI00,491,439
d. P100,736.871
3715
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