Issue price of Bonds: The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest. Bonds Issuance: The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period. The determination of issue price of bonds when the market rate of interest is 8%.

Question

Want to see the full answer?

Answer 1

Question

Chapter 14, Problem 16QS

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Jessie inc.which uses a predetermined overhead rate based rate please solve this question

Help

I need answer accounting

Answer 2

Question

Chapter 14, Problem 16QS

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 14, Problem 16QS

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 14, Problem 16QS

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 14, Problem 16QS

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Answer 6

Chapter 14, Problem 16QS

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Answer 7

Chapter 14, Problem 16QS

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 14 - Prob. 1DQ Ch. 14 - Prob. 2DQ Ch. 14 - Prob. 3DQ Ch. 14 - Prob. 4DQ Ch. 14 - Prob. 5DQ Ch. 14 - Prob. 6DQ Ch. 14 - Prob. 7DQ Ch. 14 - Explain the concept of accrued interest on bonds...Ch. 14 - Prob. 9DQ Ch. 14 - Prob. 10DQ

Concept explainers

Videos

Want to see the full answer?

Chapter 14 Solutions