On January 1, 2022, A company issued 1,000 of its January 1, 2017, 8%, 10 year, P1,000 face value bonds with detachable stock warrants at P1,250,000. Each bonds, which pays semi-annual interest every January 1 and July 1, carried 5 detachable warrants which entitle the holder to acquire one share of ordinary shares for every warrant at a specified option price of P55 per share. Immediately after the issuance the prevailing market rate of interest is at 10% and the market value of the warrants was P30. How much is the equity component of the compound instrument? (Round off PV factor to four decimal places. Round off final answer to the nearest peso.) What is the carrying amount of the bonds as of December 31, 2022? (Round off PV factor to four decimal places. Round off final answer to the nearest peso.)

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
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On January 1, 2022, A company issued 1,000 of its January 1, 2017, 8%, 10 year, P1,000 face value bonds with detachable stock warrants at P1,250,000. Each bonds, which pays semi-annual interest every January 1 and July 1, carried 5 detachable warrants which entitle the holder to acquire one share of ordinary shares for every warrant at a specified option price of P55 per share. Immediately after the issuance the prevailing market rate of interest is at 10% and the market value of the warrants was P30. How much is the equity component of the compound instrument? (Round off PV factor to four decimal places. Round off final answer to the nearest peso.) What is the carrying amount of the bonds as of December 31, 2022? (Round off PV factor to four decimal places. Round off final answer to the nearest peso.)
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