Schallheim Corporation’s outstanding bonds have a $1,000 par value, a 7 percent semiannual coupon, 16 years to maturity, and an 8.5 percent yield to maturity (YTM). What is the bond’s price? a. $870.11 b. $871.37 c. $1,000.00 d. $914.20 e. $455.00

Schallheim Corporation’s outstanding bonds have a $1,000 par value, a 7 percent semiannual coupon, 16 years to maturity, and an 8.5 percent yield to maturity (YTM). What is the bond’s price? a. $870.11 b. $871.37 c. $1,000.00 d. $914.20 e. $455.00

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EB: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual...

See similar textbooks

Related questions

Q: YYZ Company semiannual-pay bonds have a coupon rate of 8.2 percent, 16 years to maturity, and a…

A: The objective of the question is to calculate the Yield to Maturity (YTM) of a semiannual-pay bond…

Q: Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a…

A: Yield to call is the rate of return the bond earns till the date of call, it considers the current…

Q: Bearcat Corporation is offering bonds to the market with a coupon of 15 percent. The bonds make…

A: Market price refers to the price at which the bonds can be sold and purchased in the market by…

Q: If the bonds are trading with a market's required yield to maturity of 12 percent, are these…

A: The price of the bond is the PV of all coupons and par value discounted at the YTM. The bond is said…

Q: Nesmith Corporation's outstanding bonds have a $1,000 par value, a 8% semiannual coupon, 8 years to…

A: Par value is $1,000Coupon rate is 8%Coupon frequency is semi annual i.e. 2Time to maturity is 8…

Q: A company's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 14 years to…

A: Computation:

Q: with a coupon that pays Disney issued a 30-year bond with a par value of $1,000, last year, $35…

A: Price of bond is the present value of the coupon payments plus present value of the par value of the…

Q: Haswell Enterprises' bonds have a 10-year maturity, a 9% semiannual coupon, and a par value of…

A: To find the price of the bond, we used the formula for the present value of a bond's cash flows.…

Q: Bacon Signs Inc. has $500,000 outstanding of $1000 par value bonds with a coupon interest rate of…

A: Approach to solving the question:Please see attached photo for detailed solutions. Thank…

Q: al-pay coupon bonds that sell for 97.5 percent of par and mature in 22 years. What is he yield to…

A: A bond is a kind of debt security issued by the government and private companies to the public for…

Q: Bellamee Ltd has bonds outstanding with five years to maturity and are priced at $920.87. If the…

A: Face Value = $1,000 Coupon Rate = 7% Time Period = 5 years Price = $920.87

Q: Yan Yan Corp. has a $2.000 par value bond outstanding with a coupon rate of 4.8% paid semiannually…

A: Issue price of bonds would be the present value of the interest annuity & maturity amount at…

Q: Ninja Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon…

A: Par value of the bond is $1,000. Maturity is 10 years. Annual coupon payment is $70. Required…

Q: Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of…

A: Data given: Par value = $1000 N= 10 year Coupon= 6.25% (semiannual) Interest rate =10.5% (semi…

Q: Tidewater Corp.'s bonds have a 7% coupon rate. Interest is paid semiannually and the bonds have a…

A: We require to compute the current price i.e. present value of bond in this question. We can…

Q: McCoy Industries' bonds currently sell for $1,302.40 and have a $1,000 par value. They have a…

A: Current Price of Bond = pv = $1302.40face Value = fv = $1000Coupon rate = c = 6.25%Time = t = 10

Q: McConnell Corporation has bonds on the market with 15 years to maturity, a YTM of 7.0 percent, a par…

A: A Bond refers to a concept that is defined as an instrument that represents the loan being made by…

Q: Corp's outstanding bonds have a $1,000 par value, an 12% semiannual coupon. 9years to maturity, and…

Q: Onipa Hia Mmoa Holdings bonds have an annual coupon payment of 7.25%. The bonds have a par value of…

A: Coupon rate = 7.25%Par value = 1000Bond price = 1125Maturity period = 13 years

Q: Sentry Corp. bonds have in annual coupon payment of 7.25%. The bonds have a par value of $1,000, a…

A: We require to compute the yield to maturity of bond in the above given question.

Q: A firm has an issue of $1,000 par value bonds with a 12 percent stated interest rate outstanding.…

A: Face Value of bond =$1000 Coupon Rate or Interest Rate =12 % Coupon Amount =$1000*12% =$ 120…

Q: A corporate bond makes payments of $96.70 semi-annually for ten years with a final payment of…

A: We are given that the bond makes semi-annual payments of $96.70 for 10 years and a final payment of…

Q: Solvay Corporation's bonds have a 20-year maturity, a 12% semiannual coupon, and a par value of…

A: Compound = Semiannually = 2Time = t = 20 * 2 = 40Coupon rate = 12 / 2 = 6%Face Value = fv =…

Q: Sentry Corp. bonds have an annual coupon payment of 7.69%. The bonds have a par value of $1,000, a…

A: Annual coupon will be $1000 * 7.69% = $76.9 YTM using rate function in excel

Q: A 15,000, 5 ½% bonds with quarterly coupons is priced to yield 4 ½% converted quarterly. If it is…

A: The question is based on the concept of Bond valuation and pricing. The price of a bond is…

Q: Am. 112.

A: Step-by-step Calculation:Coupon Payment: The coupon rate is 8.0% per year. Since the bond pays…

Q: Which of the following bonds is trading at a premium? a two-year bond with a $50,000 face value…

A: a) 1) If coupon rate is greater than Yield to maturity, then bond is trading at Premium 2) If coupon…

Q: Miles Corporation's bonds have a 15-year maturity, an 8% semi-annual coupon, and a par value of…

A: The bond's price is present value of future coupons and par value receivable at maturity. bond pays…

Q: Schallheim Corporation’s outstanding bonds have a $1,000 par value, a 14 percent semiannual coupon,…

A: Compound = Semiannually = 2Face Value = fv = $1000Coupon Rate = 14 / 2 = 7%Time = t = 6 * 2 =…

Q: (Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) The 13-year $1.000 par bonds of Vail…

A: Bonds generally make periodic interest payments, or "coupon payments," to their bondholders, this…

Q: Miles Corporation's bonds have a 15-year maturity, an 8% semi-annual coupon, and a par value of…

A: The amount that the bondholder expects in order to invest in bonds at the time of maturity is…

Q: kpoint 9.3) (Bond vait The current market price for the bond is $1,080. 1,000 par bonds a…

A: Par value = $1,000Coupon rate = 11%Years to maturity = 12 yearsRequired yield = 8%Current price of…

Q: Assume a $1,000 face value bond has a coupon rate of 8.5 percent, pays interest semi-annually, and…

A: Face Value of the Bond=$1,000 Duration (n)=8*2=16 periods Coupon rate=8.5% Thus, Periodic coupon…

Q: ABC Corporation’s outstanding bonds have a $1,000 par value, a 9% annual coupon, 5 years to…

A: bonds can be a useful investment for those looking for a steady stream of income and a relatively…

Q: Fingen's 16-year, $1 comma 000 par value bonds pay 14 percent interest annually. The market price…

A: Face value$1,000Market price of bond$1,070Coupon rate14%Years to maturity16 years

Q: Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 20 years to…

A: Semiannual coupon payment = (Coupon rate/2)*Par value = (0.07/2)*$1000 = 0.035*$1000 = $35 Number of…

Q: 2. Follie Corp.'s bonds have a 20-year maturity, a 7.80% semiannual coupon, and a par value of…

A: Step 1 Bond Price The bond price is the discounted present value of the future cash flow that a bond…

Q: Nesmith Corporation's outstanding bonds have a $1,000 par value, an 12% semiannual coupon, 9 years…

A: Bond price: Bond price is the current price of the payment. Payment includes coupon payment and…

Q: You are eyeing an investment in a corporate bond which has a YTM of 14.95%, and a stated rate of…

A: Value of the bond is the present value of the future payments to be received. Future value payments…

Q: Ninja Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon…

A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…

Q: Elliot Enterprises' bonds currently sell for $1,150; have an 11% coupon interest rate and a $1,000…

A: Data given:: Par value = $1000 Selling Price = $1,150 Coupon rate = 11% ( pay interest annually) =…

Q: Suppose an Exxon Corporation bond will pay $1,000 ten years from now. If the going interest rate on…

A: Future Value (FV) of amount to be received = $1,000Number of years (n) = 10Interest rate (r) = 7% or…

Q: Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 19 years to…

A: Bond price is the current value of the future payments at a given rate of interest. Future payments…

Question

Schallheim Corporation’s outstanding bonds have a $1,000 par value, a 7 percent semiannual coupon, 16 years to maturity, and an 8.5 percent yield to maturity (YTM). What is the bond’s price?

a.
$870.11

b.
$871.37

c.
$1,000.00

d.
$914.20

e.
$455.00

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.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Bond Price Formula

VIEW

Step 2: Calculating Bond price

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?
Which of these two bonds offers the highest current yield? Which one has the highest yield to maturity? a. A 6.55 percent, 22-year bond quoted at 52.000 b. A 10.25 percent, 27-year bond quoted at 103.625
Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
Gingko Inc. issued bonds with a face value of $100,000, a rate of 7%, and a 10-yearterm for $103,000. From this information, we know that the market rate of interest was ________. A. more than 7% B. less than 7% C. equal to 7% D. equal to 1.3%
Schallheim Corporation’s outstanding bonds have a $1,000 par value, a 14 percent semiannual coupon, 6 years to maturity, and an 11 percent yield to maturity (YTM). What is the bond’s price? a. $1,129.28 b. $1,126.92 c. $1,074.93 d. $740.31 e. $1,000.00
A brand has bonds on the market with 19 years to maturity, a YTM of 11.0 percent, a par value of $1,000, and a current price of $1,206.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? A. 13.71% B. 13.61% C. 27.27% D. 11.28% E. 22.60%
Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 10.5%, based on semiannual compounding. What is the bond's price? Select the correct answer. a. $746.52 b. $752.34 c. $743.61 d. $749.43 e. $740.70
Moerdyk Corporation's bonds have a 25-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 8.20%, based on semiannual compounding. What is the bond's price? a. $937.23 Ob.$918.85 Oc. $689.14 Od. $899.68 Oe. $854.53
If the YTM on the following bonds are identical except, what is the price of bond B? Bond A Bond B Face value $1,000 $1,000 Semiannual coupon $45 $35 Years to maturity 20 20 Price $1,098.96 ?
What is the fair market value of a bond with the following features: (1) par value of $1000, (2) coupon payment of $86, and (3) 10-year maturity? Assume that the current interest rates are 9% $1086.24 $1110.00 $1000.00 $974.33
Miles Corporation's bonds have a 15-year maturity, an 8% semi-annual coupon, and a par value of $1,000. The going interest rate is 5.50%, based on semi-annual compounding. What is the bond's price? Select one: a. $1,253.11 b. $1,200.44 c. $1,295.85 d. $1,211.90
A bond with $898,000 face value that pays 10% coupon is issued at 102 1/2, i.e., 102.5% of its face value. Is this bond issues at premium of discount? And what is the amount of cash received as a result of issuing this bond? a. Premium; $920,450 b. Discount; $673,500 c. Premium; $987,800 d. PAR Value; $898,000 A B C D