Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter F, Problem F.4BE
To determine
To compute: The present value of the price of bond investment by Corporation H using excel.
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Financial Accounting (12th Edition) (What's New in Accounting)
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- Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?arrow_forwardBonds Valuation and Yield I. Two types of bonds are offered to you for bond investment considerations: P10,000, 5-year, 10% p.a. Debenture bond issued by Let's Go corp. The interest payable twice a year. The bond has four years remaining term and is offered to you at 98-1/2. □ P5,000, 10-year, 10% p.a. Mortgage bond issued by Let's Go corp. Interest is paid annually. The bond has still 7 years remaining life before its maturity. It is offered to you by a fried at 101-3/4. □ It has been your policy that your desired rate of return for unsecured investment should be 12% p,a, and for secured investment will earn a minimum of 8% p.a. Based on the above information, you would like to know the following: a. The value of the bond for the two types of bond offered. b. The exact yield to maturity (YTM) of the two bonds offered. c. Which bond you wish to invest? Why?arrow_forwardCan you show me step by step how to solve this?arrow_forward
- Show the solution in good accounting formarrow_forwardAssume that Company A wants to borrow $500,000 by issuing 100 10-year, $5,000 bonds. The interest rate required for similar bonds from similar corporations is 10 percent. What's the face value of these bonds? A. $5,500 B. $5,600 C. $5,000 D. $1,500arrow_forwardHaddockCorp. purchased fifteen $1,000 7% bonds of Galvan Corporation when the market rate ofinterest was 8%. Interest is paid semiannually, and the bonds will mature in nine years. Usingthe PV function in Excel®, compute the price Haddock paid (the present value) for the bondinvestment.arrow_forward
- Vishnoarrow_forwardMa3. Dino Company purchased a bond with a face value of $100,000 with a stated interest rate of 6% that pays interest semi-annually on June 30 and December 31. The bond was purchased on January 1, 20X1 and matures in 5 years. It was purchased at 91.889 when interest rates in the market were 8%. Record journal entries that the company would record during 20X1 if the company accounts for this investment under the amortized cost model. Indicate the amounts that would appear on the year-end statement of financial position with regard to this investment. Assume that market interest rate fell to 2% by January 1, 20X3. On that date the bond investment was sold. Record the journal entry that would be made at that time.arrow_forwardClick here to view the factor table. https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdfarrow_forward
- 2. Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?arrow_forward1. Help me selecting the right answer. Thank youarrow_forwardDon't give answer in imagearrow_forward
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