Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 10, Problem 22P
For the next two problems, assume interest payments are on a semiannual basis.
You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The
a. Compute the price of the bonds based on semiannual analysis.
b. With 10 years to maturity, if yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds?
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You are called in as a financial analyst to appralse the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted
annual Interest rate of 9 percent, which is pald semlannually. The yleld to maturity on the bonds is 12 percent annual Interest. There
are 10 years to maturity. Use Anpendix B and Appendix D for an approximate answer but calculate your final answer using the formula
and financial calculator methods.
a. Compute the price of the bonds based on semiannual analysis. (Do not round Intermedlate calculations. Round your final answer
to 2 decimal places.)
Bond price
827.05
b. With 5 years to maturity, if yield to maturity goes down substansially to 10 percent what w be the new price of the bonas? (Do not
round Intermediate calculetions. Round your final answer to 2 decinsel places.)
New bond prc
1
Your company issues $3,500,000 bonds at 7% interest with annual interest payments. Bonds
have a maturity date in 30 years. At the time of issue, the market rate is 5%.
а.
Calculate the issue price of the bond.
b. Record the journal entry for the issue of the bond
С.
Record the journal entry for the first interest payment
d. How much interest is recorded on the income statement in Year 1?
е.
Record the journal entry for the final entry at the bond maturity date.
Chapter 10 Solutions
Foundations of Financial Management
Ch. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - What are the three factors that influence the...Ch. 10 - If inflationary expectations increase, what is...Ch. 10 - Why is the remaining time to maturity an important...Ch. 10 - What are the three adjustments that have to be...Ch. 10 - Why is a change in required yield for preferred...Ch. 10 - What type of dividend pattern for common stock is...Ch. 10 - What two conditions must be met to go from Formula...Ch. 10 - What two components make up the required rate of...
Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - What approaches can be taken in valuing a firm’s...Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - For the first 20 bond problems, assume interest...Ch. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - For the first 20 bond problems, assume interest...Ch. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - For the first 20 bond problems, assume interest...Ch. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - For the first 20 bond problems, assume interest...Ch. 10 - For the first 20 bond problems, assume interest...Ch. 10 - Prob. 17PCh. 10 - Prob. 18PCh. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - For the next two problems, assume interest...Ch. 10 - For the next two problems, assume interest...Ch. 10 - For the next two problems, assume interest...Ch. 10 - For the next two problems, assume interest...Ch. 10 - For the next two problems, assume interest...Ch. 10 - Prob. 26PCh. 10 - All of the following problems pertain to the...Ch. 10 - All of the following problems pertain to the...Ch. 10 - Ecology Labs Inc. will pay a dividend of $6.40 per...Ch. 10 - Maxwell Communications paid a dividend of $3 last...Ch. 10 - Justin Cement Company has had the following...Ch. 10 - A firm pays a dividend at the end of year one ...Ch. 10 - A firm pays a dividend at the end of year one ...Ch. 10 - Trump Office Supplies paid a dividend last year....Ch. 10 - Beasley Ball Bearings paid a dividend last year....Ch. 10 - Prob. 2WECh. 10 - Prob. 3WECh. 10 - Prob. 4WE
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