Problem 14-24 Calculating the Cost of Debt (LO3)Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the followingtable.Bond1234Coupon Rate6.00 %7.507.206.80Price Quote103.42110.74110.09102.99Cost of debtMaturity5 years8 years%15.5 years25 yearsFace Value$ 45,000,00040,000,000If the corporate tax rate is 34%, what is the after-tax cost of the company's debt? (Do not round intermediate calculations. Round thefinal answer to 2 decimal places.)50,000,00065,000,000

The market values are used for finding the total cost of company debt in the given case. The YTM…

Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following able. Bond 1 2 3 4 Coupon Rate 6.00 % 7.50 7.20 6.80 Price Quote 103.42 110.74 110.09 102.99 Maturity 5 years 8 years % 15.5 years 25 years Face Value $ 45,000,000 40,000,000 50,000,000 65,000,000 the corporate tax rate is 34%, what is the after-tax cost of the company's debt? (Do not round intermediate calculations. Round nal answer to 2 decimal places.) Cost of debt

Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following able. Bond 1 2 3 4 Coupon Rate 6.00 % 7.50 7.20 6.80 Price Quote 103.42 110.74 110.09 102.99 Maturity 5 years 8 years % 15.5 years 25 years Face Value $ 45,000,000 40,000,000 50,000,000 65,000,000 the corporate tax rate is 34%, what is the after-tax cost of the company's debt? (Do not round intermediate calculations. Round nal answer to 2 decimal places.) Cost of debt

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.1P

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Problem 14-24 Calculating the Cost of Debt (LO3) Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. Price Bond Coupon Rate Quote 1 7.00 % 2 8.50 103.38 110.70 Maturity 5 years Face Value $ 45,000,000 3 8.20 8 years 110.05 15.5 years 40,000,000 4 7.80 102.95 25 years 50,000,000 65,000,000 If the corporate tax rate is 34%, what is the after-tax cost of the company's debt? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Cost of debt %
Use the following to answer questions 11 – 15 AL issues 4.0%, 20-year bonds with a face amount of $1,000,000 for $986,529.23. The market interest rate for bonds of similar risk and maturity is 4.1%. Interest is paid annually. 11. $. Determine the interest payment. 12. $ (rounded to nearest dollar). Determine interest expense for the first interest payment. What will happen to interest expense each interest payment? (Increase, decrease, remain constant) 13. What will happen to the bond liability (carrying value) each interest payment? (Increase, decrease, remain constant). 14. How much will the company pay out $ when the bonds mature in 20 years (assume all interest payments have already been paid)? 15.
- 3 S14-5 Determining bond amounts Savvy Drive-Ins borrowed money by issuing $3,500,000 of 9% bonds payable at 99.5. Interest is paid semiannually. Requirements 1. How much cash did Savvy receive when it issued the bonds payable? 2. How much must Savvy pay back at maturity? 3. How much cash interest will Savvy pay each six months? S14 6
Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell Inc. issued $60,400,000 of 10-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $64,009,069. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be…
! Required information Problem 9-7B Calculate the issue price of a bond and prepare amortization schedules (LO9-5, 9-7) [The following information applies to the questions displayed below.] Christmas Anytime issues $830,000 of 6% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: Problem 9-7B Part 2 2. The market interest rate is 7% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.) Issue price Date $ Cash Paid 830,000 Interest Change in Expense Carrying Value 01/01/2021 06/30/2021 $ 29,050 $ 29,050 12/31/2021 29,050 Carrying Value
Required information Problem 9-7B Calculate the issue price of a bond and prepare amortization schedules (LO9-5, 9-7) [The following information applies to the questions displayed below.] Christmas Anytime issues $720,000 of 6% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: Problem 9-7B Part 1 Required: 1. The market interest rate is 6% and the bonds issue at face amount. (FV of $1. PV of $1. FVA of $1. and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.) Issue price Date Cash Paid Interest Expense Change in Carrying Value Carrying Value 01/01/2021 06/30/2021 12/31/2021
v2.cengagenow.com 403114 Discount Amortization On the first day of the fiscal year, a company issues a $1,100,000, 7%, 7-year bond that pays semiannual interest of $38,500 ($1,100,000 x 7% x 1/2), receiving cash of $1,041,903. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Interest Expense Discount on Bonds Payable v Cash v Feedback V Check My Work The straight-line method of amortization provides equal amounts of amortization over the life of the bond. 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes 5. Compute the price of $5,946,703 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $ Present value of the semiannual interest payments Price received for the bonds 2$ 00
Problem 6-2 Determinants of Interest Rates for Individual Securities (LG6-6) You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 2.00 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate= 0.60% Default risk premium = 1.90% Liquidity risk premium = 1.40% Maturity risk premium = 2.50% a. What is the inflation premium? (Round your answer to 2 decimal places.) Expected IP %
Exercise 14-17A (Algo) Computing bond interest and price; recording bond issuance LO C2 Brin Company issues bonds with a par value of $610,000. The bonds mature in 9 years and pay 9% annual interest in semiannual payments. The annual market rate for the bonds is 12%. (Table B.1. Table 8.2. Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below.. Requirei 1 Required 2 Compute the price of the bonds as of their issue date. (Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount.) Table Values are Based on: Cash Flow Par (maturity) value Interest (annuity) Price of bonds nw 18 6.0% Answer is complete but not entirely correct. Table Value 0.3503✔ 10.8280 x Amount $610,000 $ 27,450…
Exercise 5-22 (Algo) Price of a bond; interest expense [LO5-9, 5-10] On June 30, 2024, Single Computers issued 7% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2039 (15 years). The market rate of interest for similar bond issues was 6% (3.0 % semiannual rate). Interest is paid semiannually (3.5%) on June 30 and December 31, beginning on December 31, 2024. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds on June 30, 2024. 2. Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Note: Enter all the values as positive value. Round your final answers to nearest whole dollar amount, not in…
of 6 - 1:22:32 ook 17 rint ! Required information [The following information applies to the questions displayed below.] Temptation Vacations issues $49 million in bonds on January 1, 2024, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: (1) Date 1/1/2024 6/30/2024 12/31/2024 (2) Cash Paid for Interest $1,470,000 1,470,000 Stated annual interest rate (3) Interest Expense 4. What is the stated annual interest rate? $1,378,755 1,376,473 % (4) Decrease in Carrying Value $91,245 93,527 (5) Carrying Value $55,150, 180 55,058,935 54,965,408 ↳