The Province of Ontario issued a $175 million face value bond on March 1, 1995, carrying a 9.5% couponwith 50 years until maturity. The matching sinking fund, with the payment rounded up to the next $100,is expected to earn 6.3% compounded semi-annually, and will retire the debt in full upon maturity.1. Calculate the annual cost of the bond debt2. Calculate the book value of the debt on September 1, 2015

Bonds are financial instruments that companies issue and secure as convertible securities.Bonds are…

Answered: The Province of Ontario issued a $175…

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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On April 1, 2014, Fredriksen Corp. sold a $700 million bond issue to finance the purchase of a new distribution facility. These bonds were issued in $1,000 denominations with a maturity date of April 1, 2034. The bonds have a coupon rate of 8.00% with interest paid semiannually. Required: a) Determine the value today April 1, 2024 of one of these bonds to an investor who requires a 12 percent return on these bonds. Why is the value today different from the par value? b) Assume that the bonds are selling for $925.00. Determine the current yield and the yield-to-maturity. Explain what these terms mean. c) Explain what layers or textures of risk play a role in the determination of the required rate of return on Fredriksen's bonds.
A company issued bonds with a par value of $250,000 and a maturity of 25 years. The Bonds pay interest every six months based on a nominal interest rate of 8% per year. If on the date of issuance of the bonds the market rate (yield) is 10%: a. What will be the selling price of the bonds? b. If after 15 years the company retires the bonds, paying the amount of $225,000, how much will the gain or loss on debt retirement? Go back and assume that the market rate is 5.75%. a. What will be the selling price of the bonds? b. Make the journal entry to recognize interest expense in the third six-month period of the bonds. Assume that the bonds do NOT pay periodic interest. a. What will be the selling price of the bonds? b. Make the journal entry to recognize interest expense in the third year of the bonds.
Rivera Inc. is considering the issuance of $500,000 face value, ten-year term bonds. The bonds will pay 10% interest each December 31. The current market rate is 10%; therefore, the bonds will be issued at face value. I need help calculating the issue price of the bonds given interest is paid annually but that the market rate of interest is 8%; the nominal rate is still 10%.
Suppose a State of North Carolina bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 5.5%, how much is the bond worth today? $585.43 $614.70 $645.44 $677.71 $711.59
Suppose a State of New Jersey bond will pay $1,000 five years from now. If the going interest rate on these 10-year bonds is 4.1%, how much is the bond worth today? 1. $675.79 2. $817.99 3. $628.96 4. $749.39 5. $669.10
Please answer all questions and show all calculations. Thank you.
The Province of Ontario issued a $6000 bond with coupon rate of 9%, redeemable on February 1, 2018. If Julie purchased this bond on October 14, 2010 when the yield was 5% compounded semi-annually, calculate the purchase price of the bond. These steps may be important Step 1: Find previous interest payment date. Step 2: Find price at previous interest payment date
Marty Corp is issuing a perpetual bond today that will pay $100 per year starting in 3 years. If the cost of capital is 5%, what is the value of this bond today? Choose the closest. a) $2,000 b) $2,124 c) $1,997 d) $1,814

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