The entity received P7, 580,000 cash from the issuance of its 9%, 3-year P8, 000,000 par value preference shares. Additionally assume that these shares have a liquidating value of P8, 200,000. How much is the cost of the preference shares using the following methods?

The entity received P7, 580,000 cash from the issuance of its 9%, 3-year P8, 000,000 par value preference shares. Additionally assume that these shares have a liquidating value of P8, 200,000. How much is the cost of the preference shares using the following methods?

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

REQUIREMENTS:

1. Interpolation method using multiplies of 1%

2. Yield-to-maturity formula

The entity received P7, 580,000 cash from the issuance of its 9%, 3-year P8, 000,000 par value preference shares. Additionally
assume that these shares have a liquidating value of P8, 200,000. How much is the cost of the preference shares using the
following methods?

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