On January 1, 2025, Crane Co. issued ten-year bonds with a face value of $5,500,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 10 periods at 10% 0.38554 Present value of 1 for 10 periods at 12% 0.32197 Present value of 1 for 20 periods at 5% 0.37689 Present value of 1 for 20 periods at 6% 0.31180 Present value of annuity for 10 periods at 10% 6.14457 Present value of annuity for 10 periods at 12% 5.65022 Present value of annuity for 20 periods at 5% 12.46221 Present value of annuity for 20 periods at 6% 11.46992 Calculate the issue price of the bonds. (Round final answer to 0 decimal places, e.g. 25,000.) Issue price of bond
On January 1, 2025, Crane Co. issued ten-year bonds with a face value of $5,500,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 10 periods at 10% 0.38554 Present value of 1 for 10 periods at 12% 0.32197 Present value of 1 for 20 periods at 5% 0.37689 Present value of 1 for 20 periods at 6% 0.31180 Present value of annuity for 10 periods at 10% 6.14457 Present value of annuity for 10 periods at 12% 5.65022 Present value of annuity for 20 periods at 5% 12.46221 Present value of annuity for 20 periods at 6% 11.46992 Calculate the issue price of the bonds. (Round final answer to 0 decimal places, e.g. 25,000.) Issue price of bond
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
Related questions
Question
| 0.38554 | ||
| Present value of 1 for 10 periods at 12% | 0.32197 | |
| Present value of 1 for 20 periods at 5% | 0.37689 | |
| Present value of 1 for 20 periods at 6% | 0.31180 | |
| Present value of |
6.14457 | |
| Present value of annuity for 10 periods at 12% | 5.65022 | |
| Present value of annuity for 20 periods at 5% | 12.46221 | |
| Present value of annuity for 20 periods at 6% | 11.46992 |
Calculate the issue price of the bonds. (Round final answer to 0 decimal places, e.g. 25,000.)
| Issue price of bond |
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Follow-up Question
Prepare the amortization table for 2025, assuming that amortization is recorded on interest payment dates using the effective-interest method. (Round answers to 0 decimal places, e.g. 25,000.)
|
Date
|
Cash
|
Expense
|
Amortization
|
Carrying Amount
|
||||
|---|---|---|---|---|---|---|---|---|
|
1/1/25
|
$enter a dollar amount | |||||||
|
6/30/25
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$enter a dollar amount | $enter a dollar amount | $enter a dollar amount | enter a dollar amount | ||||
|
12/31/25
|
enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount |
Solution
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