Bonds issued at face amount, a discount, or a premium Bonds Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

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Answer 1

Question

Chapter 9, Problem 9.5BP

1.

To determine

Bonds issued at face amount, a discount, or a premium

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

2.

To determine

Original issue price of bond

3.

To determine

Face amount of the bonds

4.

To determine

Stated annual interest rate.

5.

To determine

Market annual interest rate

6.

To determine

Total cash paid for interest if bonds mature in 20 years.

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Answer 2

Question

Chapter 9, Problem 9.5BP

1.

To determine

Bonds issued at face amount, a discount, or a premium

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

2.

To determine

Original issue price of bond

3.

To determine

Face amount of the bonds

4.

To determine

Stated annual interest rate.

5.

To determine

Market annual interest rate

6.

To determine

Total cash paid for interest if bonds mature in 20 years.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 9, Problem 9.5BP

1.

To determine

Bonds issued at face amount, a discount, or a premium

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

2.

To determine

Original issue price of bond

3.

To determine

Face amount of the bonds

4.

To determine

Stated annual interest rate.

5.

To determine

Market annual interest rate

6.

To determine

Total cash paid for interest if bonds mature in 20 years.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 9.5BP

1.

To determine

Bonds issued at face amount, a discount, or a premium

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

2.

To determine

Original issue price of bond

3.

To determine

Face amount of the bonds

4.

To determine

Stated annual interest rate.

5.

To determine

Market annual interest rate

6.

To determine

Total cash paid for interest if bonds mature in 20 years.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 9, Problem 9.5BP

1.

To determine

Bonds issued at face amount, a discount, or a premium

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

2.

To determine

Original issue price of bond

3.

To determine

Face amount of the bonds

4.

To determine

Stated annual interest rate.

5.

To determine

Market annual interest rate

6.

To determine

Total cash paid for interest if bonds mature in 20 years.

Answer 6

Chapter 9, Problem 9.5BP

1.

To determine

Bonds issued at face amount, a discount, or a premium

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Answer 7

Chapter 9, Problem 9.5BP

1.

To determine

Bonds issued at face amount, a discount, or a premium

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Answer 8

2.

To determine

Original issue price of bond

Answer 9

2.

To determine

Original issue price of bond

Answer 10

3.

To determine

Face amount of the bonds

Answer 11

3.

To determine

Face amount of the bonds

Answer 12

4.

To determine

Stated annual interest rate.

Answer 13

4.

To determine

Stated annual interest rate.

Answer 14

5.

To determine

Market annual interest rate

Answer 15

5.

To determine

Market annual interest rate

Answer 16

6.

To determine

Total cash paid for interest if bonds mature in 20 years.

Answer 17

6.

To determine

Total cash paid for interest if bonds mature in 20 years.

Answer 18

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Answer 19

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Answer 20

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Answer 21

Ch. 9 - What is capital structure? How do the capital...Ch. 9 - Prob. 2RQ Ch. 9 - How do interest expense and the carrying value of...Ch. 9 - Prob. 4RQ Ch. 9 - What are bond issue costs? What is an underwriter?Ch. 9 - Why do some companies issue bonds rather than...Ch. 9 - Prob. 7RQ Ch. 9 - What are convertible bonds? How do they benefit...Ch. 9 - How do we calculate the issue price of bonds? Is...Ch. 9 - Prob. 10RQ

Solution Summary: The author explains that bonds are issued at face value, discount, or premium, and that the state annual interest rate is 7%.

Original issue price of bond

Face amount of the bonds

Stated annual interest rate.

Market annual interest rate

Total cash paid for interest if bonds mature in 20 years.

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Chapter 9 Solutions