Langford Co. Issued 14-year bonds a year ago at a coupon rate of 8.8%. The bonds make semiannual payments. If the YTM on thesebonds Is 7.1%, what is the current bond price? (Do not round Intermediate calculations. Round the final answer to 2 decimal places.Omit $ sign in your response.)Current bond price

Answer : Future value (FV)= $1000 Coupon rate = 8.8%/2= 4.4% Coupon payment (PMT) = $1,000*4.4% =…

Answered: The bonds make semiannual payments. ?…

Business

Accounting

The bonds make semiannual payments. ? (Do not round Intermediate calculations. Round the final answert

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: ight-line method of amortization is used, the amount of unamortized premium on bonds payable will…

A: Amortization is the method of reducing or accounting for, an amount over a period of time. Over the…

Q: None

Q: am. 112.

A: In this scenario, the company has a fixed rate debt and enters into an interest rate swap where it…

Q: Ques 6) What are the two methods of calculating the percentage annual return earned by the owner of…

A: Discount yield is the expected annual percentage rate of return of return earned on a bond when it…

Q: Were the bonds in the entry on Dec. 31 of Year 2 redeemed at maturity? You suspect there is an error…

A: Journal Entry is the first entry of transactions in the accounting cycle. Journal entry has a debit…

Q: Which one is not suitable for serial bonds? Select one: a. Principal matures in annual installments…

A: THE PRINCIPAL MATURES IN ONE LUMP-SUM AMOUNT IS SUITABLE FOR TERM BONDS . ALL OTHER OPTIONS ARE…

Q: Based on Appendix 14A) Why will bonds always sell at their price plus any interest that has accrued…

A: Bonds: Bonds are a kind of interest-bearing notes payable, usually issued by companies,…

Q: Vi (H X.) 25) A credit market instrument that pays the owner a fixed coupon payment every year until…

A: This question involves identifying the correct term for a credit market instrument that pays a fixed…

Q: 1) Were the bonds in the entry on Dec 31. of year 2 redeemed at Maturity? 2) You suspect there is…

A: Journal: Recording of a business transactions in a chronological order.

Q: When bonds are issued at a discount, what happens to the carrying value and interest expense over…

A: Bonds can be issued at both at a premium or at a discount. When issue price is lower than face value…

Q: Suppose that a trader observes the rates provided in the following table. Based on these rates, IRP…

A: The interest rate parity equation expresses the relationship that exists between exchange rates and…

Q: Journalize issuance of the bond and the first semiannual interest payment under each of the three…

A: 1 Market rate is equal to stated interest rate, so bonds will be issued at par Cash a/c…

Q: In addition to the theory of bonds, your book talks about Installment Notes. What is an Installment…

A: Bonds are paid interest each year and remaining amount that face value is paid on MATURITY.

Q: Inflation Indexed Bonds pay a fixed interest rate during the bond's life. Group of answer choices…

A: Inflation Indexed Bonds save investors from the eroding effects of inflation and act as a shield…

Q: A forward rate is a borrowing/lending rate for a loan to be made at some future date. Select…

Q: Debt securities are instruments that provide the holder a promise to pay the instrument's face value…

A: Debt securities do function as described:Promise to repay face value: When you buy a debt security…

Q: Which of the following is FALSE when redeeming a bond between semi-annual interest payment dates?

A: Bonds are typically issued at face value, which is the amount that the bondholder will receive when…

Q: None

A: Bonds : Bonds are type of financial instruments issued by government or corporations to borrow…

Q: When a bond sells at a discount, the carrying value ________ after each amortization entry.A.…

A: Bonds payable is a form of loan or debt that is being taken by the business. Regular interest…

Q: On the bottom of part 1, the interest expense, premium amortization, and book value of bond are…

A: Part 1: Workings:

Q: Borrowing Choose.. V Choose... Contract No es Contract Yes Choose... n contract Choose... rd…

A: There are many instruments available for hedging the receivables.

Q: Which of the following is an example of a money market instrument? (Select all that apply) a. 2-year…

A: Money Market instruments:-Money market products are short-term financial instruments with a maturity…

Q: In the amortization schedule for premium on bonds payable, [choose the incorrect one] the carrying…

A: Bonds issued at premium are credited to the Premium on bonds payable. Premium on bonds payable is…

Q: If a bond is retired before maturity, the journal entry to record the retirement by the issuer will…

A: Organization can raise finance either through equity or debt.Since Bond being a debt issued to raise…

Q: Do you agree with the following statement, and explain why? “If two bonds have the same duration,…

A: Bonds are the financial market instruments that represent the debt taken by a corporation from the…

Q: Plz solve !! Securities premium reserve can be used for writing of: A/ preliminary expenses B/ Fixed…

A: Securities premium amount is that amount which is received on issue of shares and this amount is…

Q: Journalize issuance of the bond and the first semiannual interest payment under each of the three…

A: Bonds payable: It is a long term liability to the organization issuing it. It is issued to raise…

Q: Imagine that the table above outlines deposits rates. Assuming A wants a fixed rate deposit and B…

A: There are two companies A wants a fixed rate deposit and B wants floating rate deposit, comparative…

Q: What would be the value of this bond if it paid interest semiannually? was missed ?

A: Price of bond is the present value of coupon payment and present value of par value of bond taken on…

Q: Plz help this is all the information for this question

A: Part 2: Explanation:Step 1: Assumption 1- The issuance of the bonds is recorded by debiting cash and…

Q: Bonds are a common long-term debt instrument. They are interesting because they are issued with a…

A: 1. If the bond is selling at a premium is that the value of a bond is more than its face value.…

Q: , What is the balance sheet value of the lease asset and the lease liability? 2 Why was the lease…

A: A debenture pays a regular interest rate or coupon rate return to investors

Q: Do all bonds offer interest income? O Yes, but only during a bull market O No, except for during a…

A: No, not all bonds offer interest income.

Q: Explain an example of Short-Term Interest-Bearing Notes.

A: Short-term interest-bearing note: The short-term interest-bearing note is a note on which interest…

Q: What is the total cost of borrowing over the life of the bond? (Round answer to 0 decimal places,…

A: To figure out the total interest paid, you take the face value of the bond, multiply it by the…

Q: None

A: STRIPS are Treasury securities formed by separating the interest and principal components of…

Q: The creditors expect to be paid interest in exchange for lending their money. This periodical…

A: The creditors of an organization lend money in return of fixed periodical payments. These payments…

Q: Which of the following is true of a discount on bonds payable? it is a contra-stockholders’…

A: Interest paid on bonds consists of two components: Interest expense and Discount on bonds payable…

Q: Analyze the truth of this statement: Unlike bonds each installment note payment includes payment of…

A: Not payable can be short term Not payable or a longterm Not payable

Q: When a borrower is unable to repay its loan, it is common that the lender would negotiate with the…

A: Debt restructuring is available for companies, individual and also countries. It is adapted to…

Q: The debt component of convertible bonds issued using IFRS is the a. present value of the future cash…

A: When a company issues a convertible bond under International Financial Reporting Standards (IFRS),…

Q: Bond Premium, Entries for Bonds Payable Transactions Rodgers Corporation produces and sells football…

A: Note: Hi! Thank you for the question, As per the honor code, we are allowed to answer three…

Q: In an interest swap contract, the exchange of cash flow calculated in each period is based upon the:…

A: Interest rate swaps are entered by the parties to obtain a lower interest or to either increase or…

Question

Langford Co. Issued 14-year bonds a year ago at a coupon rate of 8.8%. The bonds make semiannual payments. If the YTM on these
bonds Is 7.1%, what is the current bond price? (Do not round Intermediate calculations. Round the final answer to 2 decimal places.
Omit $ sign in your response.)
Current bond price

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

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, accounting and related others by exploring similar questions and additional content below.

Similar questions

Amortizing the discount on bonds payablea. increases the recorded amount of interest expense.b. reduces the semiannual cash payment for interest.c. reduces the carrying value of the bond liability.d. is necessary only if the bonds were issued at more than face value
Interest-rate swaps are: Answer a. Exchanges of equity securities for debt securities b. Agreements involving swapping of options contracts c. Agreements that allow both parties to convert floating interest rates to fixed interest rates. d. Agreements between two parties to exchange periodic interest-rate payments over some future period
1. If bonds are sold at a discount and the straight-line method of amortization is used, interest expense in earlier years will: (A) Exceed what is would have been had the effective interest rate method of amortization been used. (B) Be less than what it would have been had the effective interest rate method of amortization been used. (C) Be the same as it would have been had the effective interest rate method of amortization been used. (D) None of the above.
2.-In compound interest calculations, the interest rate applied can be known from the initial and final value of a deposit, and the time it was deposited. true or false?
22) The effective interest rate method of amortizing bonds allocates the same amount of interest expense to each period. TRUE FALSE
Show the complete solution
The bonds which are issued at less than the market rate and at the maturity date the carrying value of the bond will equal its face value is termed as Bonds issued at discount a. O b. Bonds sold at premium at different dates Oc None of the given options Od. Bonds issued at premium Clear my choice
Yu.4
Is a two-year term bond considered a short-term debt instrument?
How are the bonds issued, what is the appropriate journal entry? Provide example for issuing bonds. How do we determine the present value of a bond when market rate differs from its contract rate? How do we record the interest payment (provide examples for both premium and discount amortization), using the effective interest method? What is the difference between the effective interest method and the straight line method when amortizing either a discount or a premium? Cite and give credit to the author that you are citing.
The maturity value of a note receivable is equal to the sum of the face amount of the note O plus the interest O plus nothing else O none of these answers are correct Ominus the interest
Which of the following is not an effect of a call provision? A. Issuer can refund the bond issue if rates decline. B. Requires the issuer to pay off the loan over its life rather than all at maturity. C. Bond investors require higher yields on callable bonds D. Upon calling bonds the issuer must pay call premium to bond holder E. All of the above are effects of a call provision