Question 4 1 Computing Bond Issue Price Abbington Inc. issues $140,000 of 9% bonds that pay interest semiannually and mature in 10 years. Compute the bond issue price assuming that the prevailing market rate of interest is: Note: Round your answer to the nearest whole dollar. a. 8% per year compounded semiannually. $0 b. 10% per year compounded semiannually. $ 0

Question 4 1 Computing Bond Issue Price Abbington Inc. issues $140,000 of 9% bonds that pay interest semiannually and mature in 10 years. Compute the bond issue price assuming that the prevailing market rate of interest is: Note: Round your answer to the nearest whole dollar. a. 8% per year compounded semiannually. $0 b. 10% per year compounded semiannually. $ 0

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 38 ABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 10% and market interest rate of 12%. They will mature in 10 years. Interest will be paid semiannually. At the date of issuance, compute the present value (bond issue price) of the future cash flows. Following are appropriate factors from tables: Table % / n Present Value of $1 Present Value of ordinary annuity of $1 10%/10 .38554 6.14457 12%/10 .32197 5.65022 5%/20 .37689 12.46221 6%/20 .31180 11.46992 $286,748 $155,900 $442,648 $467,455.25
Problem 3: Straight Bonds ABC Corporation plans to issue a 9%, 10-year, P5,000,000 face value bonds. It will incur P500,000 as underwriting fee. What is the cost of the bond based on the following methods?1. Yield-to-maturity formula 2. Trial and error method (closest percent, 3 decimal places)
QUESTION 1 MaNga Inc. bonds have a current market price of $1,128.87 the bonds have an 9% annual coupon payment, a $1,000 face value, and 12 years left until maturity. The bonds may be called in 3 years at $1,125. What yield might investors expect to eam on these bonds? @7% 4.42% 7.16% 4.33%
Question 6 Municipal bonds were issued with a face value of $100,000 and a coupon rate of 0.15% per quarter, and coupon payments are quarterly. This bond is bought in the bond market before maturation, and there are only 14 payments remaining. The first coupon payment of this bond is due today and the next payment is due after three months (one quarter), which you will be entitled to receive if you buy this bond now. What is the maximum amount you should pay for this bond today? As an investor, you wish to earn 2.5% compounded daily. Consider first calculating the quarterly effective interest rate for this investor. The coupon rate can be used to calculate recurrent revenues from this bond which will be coupon rate times its face value. *Assume that a quarter is 90 days
S 2
Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 9 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 Required: Required 1 to 3 Cash Paid Required 4 $70 70 70 Interest Expense Amortization $15 17 19 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $87, (c) $17, and (d) $981. Complete this question by entering your answers in the tabs below. 3. Bonds payable year 1 3. Bonds payable year 2 $85 87 89 Balance $949 964 981…
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Computing Bond Issue Price Bushman, Inc., issues $250,000 of 9% bonds that pay interest semiannually and mature in 10 years. Compute the bond issue price assuming that th bonds' market rate is: a. 8% per year compounded semiannually. Round your answers to the nearest dollar. Present value of principal repayment $ 114,097 Present value of interest payments $ Selling price of bonds LA LA Check $ b. 10% per year compounded semiannually. Round your answers to the nearest dollar. Present value of principal repayment $ Present value of interest payments $ Selling price of bonds $ LA 0 0 h
pt 1 Exodus Limousine Company has $1,000 par value bonds outstanding at 8 percent interest. The bonds will mature in 40 years with annual payments. Use Appendix B and Appendix D. Compute the current price of the bonds if the current yield to maturity is: (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. 3 percent b. 13 percent pt 2: o Price of the bond $ 5 Show Transcribed Text Ĉ Exodus Limousine Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 30 years with annual payments. If the current yield to maturity is 15 percent, what percent of the total bond value does the repayment of principal represent? Use Appendix B and Appendix D. (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answer to 2 decimal places.) Principal repayment